Vat treatment

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sumit sood

article

25 Points Posted on 06 July 2012

if a company is providing free of cost material to the dealers in the case of replacement material (within warrantee period)

what should be the treatment of vat

1.) should the company apply vat on full amount of claim invoice(for new product)

2.) no requirement of applying vat on claim invoice

Replies (6)

Ajit kumar Dubey

Taxation Manager

797 Points Posted on 06 July 2012

Yes if any amount is charged extra, then VAT will be attracted. But, if it is given free of cost then on the ground that the cost of warranty is included in the cost of the original product, there will be no incidence of VAT.

praveen

Chartered Accountant

5709 Points Posted on 06 July 2012

Originally posted by : Ajit kumar Dubey
	Yes if any amount is charged extra, then VAT will be attracted. But, if it is given free of cost then on the ground that the cost of warranty is included in the cost of the original product, there will be no incidence of VAT.	AGREED

sumit sood

article

25 Points Posted on 06 July 2012

NO I THINK IF WE WILL DO SO

THERE WILL BE VAT AVOIDANCE

AS REPLACEMENT IS MOSTLY AFTER 6 MONTHS

AND AFTER 6 MONTHS THE VAT EARLY GIVEN IS VANISHED

SO THE COMPANY WOULD HAVE TO PAY VAT AGAIN

Ajit kumar Dubey

Taxation Manager

797 Points Posted on 07 July 2012

Mr. Sumit, you are wrongly considering it as a sales return and applying the same legality in the present case is not tenable. Hence, kindly understand the case very minutely and then provide a feedback.