02 August 2010
VAT, in simple terms, is a multi-point levy on each of the entities in the supply chain with the facility of set-off of input tax - that is, the tax paid at the stage of purchase of goods by a trader and on purchase of raw materials by a manufacturer. Only the value addition in the hands of each of the entities is subject to tax. For instance, if a dealer purchases goods for Rs 100 from another dealer and a tax of Rs 10 has been charged in the bill, and he sells the goods for Rs 120 on which the dealer will charge a tax of Rs 12 at 10 per cent, the tax payable by the dealer will be only Rs 2, being the difference between the tax collected of Rs 12 and tax already paid on purchases of Rs 10. Thus, the dealer has paid tax at 10 per cent on Rs 20 being the value addition in his hands.
Purchase price - Rs 100 Tax paid on purchase - Rs 10 (input tax) Sale price - Rs 120 Tax payable on sale price - Rs 12 (output tax) Input tax credit - Rs 10 VAT payable - Rs 2
02 August 2010
For imposing VAT there is one condition i.e. there should be value addition. If there is no value addition then there is no VAT. Generally value addition is possible by using manufacturing process.
02 August 2010
As of now, there is no charge of DVAT on real estate transactions, except for work contracts.
Further, for your kind info, If you are planning to buy a house worth more than Rs 50 lakh, get ready to shell out more money as the Delhi government is planning to impose value added tax (VAT) @1% on all property transactions above Rs 50 lakh, on similar lines as followed by MahaVAT.
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