14 November 2014
Vat is all about paying tax on incremental amount or in other words to say tax on markup added by the seller.
For understanding vat calculation u need to understand some basic terminology
Output tax : it is tax on sales made by the dealer Input tax: it is tax paid by the dealer on purchases made by the dealer Set off: it is deduction of input vat from output vat
The balance amount remained after set off is vat payable
However this calculation goes on ideal scenario with no complications
There are some inputs in which u r not eligible for take credit Also in some case u get proportionate credit or there is reduction in credit
Vat laws are state subject It varies from state to state U need to look into state law for more details But basic remains the same.
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