Clamable discount= Rs. 10,000 (This discount is given by showroom to customer at the time of sale & afterwards showroom claim this discount from its company & company reimburses it to showroom)
Rate of Vat tax= 5%
Now my question is whether vat is chargeable on Rs. 1,00,000 or Rs. 90,000 (Rs. 1,00,000- Rs. 10,000) ?
04 August 2013
The allowance of discount in the taxable turnover depends on the State VAT act, explanation.
In general, cash/trade discount/special discount allowed in the bill itself is eligible for deduction from taxable turnover and vat is charged after deduction. For e.g in kerala, certain discounts are not allowed and tax will be paid on Rs.1,00,000/- and not on Rs.90K.
05 August 2013
In chattisgarh VAT Act Sect 2(u)says, Sale price means the amount payable to a dealer as valuable consideration for the sale of any goods less any sum allowed as cash discount according to ordinary trade practice but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof other than the cost of freight or delivery or the cost of installation when such cost is separately charged.
Therefore only cash and trade discounts are eligible for deducion to charge vat.If claimable discounts shown above in your query is trade discount, then it is eligible. you can collect for Rs.90K
12 November 2013
It is not trade discount, it is cash discount & scheme discount, but is it not wrong that vat is chargeable on 90k interms of disclosing 10k as discount & afterwards co. gets claim of such 10k? In my opinion it should be charged on 100k, what does law says?
CAclubindia
