vat

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2010 Suppose i am a dealer of computers.when i purchase a computer the invoice is like below
cost of the product=100
vat@4% =4
Total =104

the party from which i purchase gives me the 4% vat i.s Rs4/ as trade discount. I want to know whether this is correct or not.If not correct then what is the correct treatment.

Kishanlal Paliwal

Kishanlal Paliwal (Expert)
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06 March 2010 Trade discount is not taxable. In this case a vendor may treat as under;

Substract the trade discount from basic sale value before applying VAT.

or

Issue credit note in reference to the original invoice.

Regards
K.L.Paliwal