28 January 2009
I am selling our finished product to one of My customers say ABC for example
Value of goods Rs.1,00,000/- VAT @4% Rs. 4,000/- Total invoice value Rs.1,04,000/-
Subsequently I am issuing credit note towards Trade Discount to the customer i.e ABC as per the following
Trade Discount Rs.20,000/- VAT @4% Rs. 800/- Total credit Note value Rs.20,800/-
Now, I have to pay VAT on my above sales to the department as follows:-
Value of Goods (Net value after deducting Trade Discount) Rs.80,000/- Add: VAT @4% (after adjusting VAT on Trade Discount) Rs. 3,200/-
Therefore, total tax payable to the goverment towards VAT Rs.3,200/-
Now, I would like to get clarification from you that, whether our above transaction is correct under VAT Rules? Whether it is correct to pay vat to the government Rs.3,200/- or I have to pay Rs.4,000/-? Regards