Is vat chargeable on the amount of clamable discount also?
This query is : Resolved
04 August 2013
For eg:
Sale Price= Rs. 1,00,000
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) ?
For eg:
Sale Price= Rs. 1,00,000
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.
You have not mentioned your STATE in the query.
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.
You have not mentioned your STATE in the query.
05 August 2013
state is chhattisgarh
05 August 2013
plz reply soon, its urgent & if possible quote sec no. also of relevant act.
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
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?
01 August 2024
In the context of VAT (Value Added Tax) in Chhattisgarh and broadly across India, the applicability of VAT on discounts follows specific principles. Here's how VAT should be handled in the situation described:
### **VAT on Discounted Sales**
**1. VAT on Sale Price:**
- **VAT Calculation Basis:** VAT is typically charged on the sale price of goods or services as invoiced to the customer, not on the discounted amount.
- **In Your Example:**
- **Sale Price:** Rs. 1,00,000
- **Claimable Discount:** Rs. 10,000 (given by showroom and reimbursed by the company)
**2. VAT Chargeable Amount:**
- **VAT Basis:** VAT should be charged on the full sale price before any discounts, i.e., Rs. 1,00,000, not the discounted amount of Rs. 90,000.
- **Reason:** VAT is applicable on the transaction value that is received or receivable for the sale of goods. The claimable discount, which is reimbursed by the company later, does not alter the initial transaction value for VAT purposes.
**3. Accounting for Discounts:**
- **Discount Treatment:** While the showroom might offer a discount to the customer, and the company reimburses this amount, the VAT should be calculated on the total sale price before the discount. The discount given to the customer is typically shown as a reduction in revenue or as a separate line item, but VAT is based on the initial sale amount.
- **Invoice Reflection:** On the invoice, VAT should be shown on the gross amount of Rs. 1,00,000, and the discount amount can be separately mentioned. The VAT invoice does not usually change based on subsequent claims or reimbursements.
### **Legal and Compliance Considerations:**
**1. State Regulations:**
- **Chhattisgarh VAT Act:** According to VAT regulations in Chhattisgarh, the taxable value on which VAT is computed is the total sale price before any discounts. Discounts that are reimbursed or claimable do not reduce the VAT base amount.
**2. GST Transition:**
- **GST Impact:** If you are operating under GST instead of VAT, the same principle applies where GST is levied on the sale price before any discounts, and discounts are usually accounted for separately.
**3. Consult Local Authorities:**
- **Verification:** For the most accurate and up-to-date information, consulting local tax authorities or a tax professional in Chhattisgarh is advisable.
### **Summary:**
VAT should be charged on the sale price of Rs. 1,00,000, and not on the discounted amount of Rs. 90,000. The claimable discount and subsequent reimbursement do not affect the VAT calculation on the initial sale price. This aligns with general VAT principles, where VAT is computed on the amount receivable for the goods or services provided.
### **VAT on Discounted Sales**
**1. VAT on Sale Price:**
- **VAT Calculation Basis:** VAT is typically charged on the sale price of goods or services as invoiced to the customer, not on the discounted amount.
- **In Your Example:**
- **Sale Price:** Rs. 1,00,000
- **Claimable Discount:** Rs. 10,000 (given by showroom and reimbursed by the company)
**2. VAT Chargeable Amount:**
- **VAT Basis:** VAT should be charged on the full sale price before any discounts, i.e., Rs. 1,00,000, not the discounted amount of Rs. 90,000.
- **Reason:** VAT is applicable on the transaction value that is received or receivable for the sale of goods. The claimable discount, which is reimbursed by the company later, does not alter the initial transaction value for VAT purposes.
**3. Accounting for Discounts:**
- **Discount Treatment:** While the showroom might offer a discount to the customer, and the company reimburses this amount, the VAT should be calculated on the total sale price before the discount. The discount given to the customer is typically shown as a reduction in revenue or as a separate line item, but VAT is based on the initial sale amount.
- **Invoice Reflection:** On the invoice, VAT should be shown on the gross amount of Rs. 1,00,000, and the discount amount can be separately mentioned. The VAT invoice does not usually change based on subsequent claims or reimbursements.
### **Legal and Compliance Considerations:**
**1. State Regulations:**
- **Chhattisgarh VAT Act:** According to VAT regulations in Chhattisgarh, the taxable value on which VAT is computed is the total sale price before any discounts. Discounts that are reimbursed or claimable do not reduce the VAT base amount.
**2. GST Transition:**
- **GST Impact:** If you are operating under GST instead of VAT, the same principle applies where GST is levied on the sale price before any discounts, and discounts are usually accounted for separately.
**3. Consult Local Authorities:**
- **Verification:** For the most accurate and up-to-date information, consulting local tax authorities or a tax professional in Chhattisgarh is advisable.
### **Summary:**
VAT should be charged on the sale price of Rs. 1,00,000, and not on the discounted amount of Rs. 90,000. The claimable discount and subsequent reimbursement do not affect the VAT calculation on the initial sale price. This aligns with general VAT principles, where VAT is computed on the amount receivable for the goods or services provided.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- ITC temporary reversal and reclaim
- GST on export of services and Input Credit
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- Inventory of finished goods
- Applicable TDS rate for sale of property in Nov 2024
- Confusion around Form 26QB fields
- GST ON EXPORT COMMISSION
- RCM INVOICING FROM NOV-2024
- Tds on building rent monthly
- Disallowance of Section 43B(h) to sez units
- Regarding Waiver of Interest levied u/s 50 of PGST/CGST Act
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
Trending Online Classes
CAclubindia
