TAX on MRP or sale price in Karnataka

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Manjunath Rampure S (Querist)
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22 February 2017 Dear all, I am an articled assistant. I am required to file a VAT return of a medicine dealer. It seems it's not as usual. What is tax on MRP and how it works? If all dealers pay tax on MRP, then it leads to cascading effect right? and if the dealer choose to pay tax on actual sale price, which form to file. Kindly guide me or lead me to an exhaustive article on this matter. The case relates to Karnataka VAT. Thanks in advance.

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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22 February 2017 Pharmacy Medicine sales Distributor pay tax on MRP price even though product sold on wholesale price. So subsequent dealer Gets VAT input on MRP Even he gets Whole sale price. Vat 105 to be filed by medicine Seller. So Retailers get Full input on MRP which already suffered Tax. Final consumer will also pay MRP questions of Margin not play since Manufacturers or distributor pay Tax on MRP.

Manjunath Rampure S

Manjunath Rampure S (Querist)
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22 February 2017 That means the basic structure of VAT lost? The tax can be paid on MRP and input claimed on MRP means the dealers in the sequence pay same amount of tax and claim same amount of input on a product from the point of production to retail sale? Please correct me if I am wrong. If you don't mind can you please explain this with a scenario...

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KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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22 February 2017 Yes, This apply only on Medicines, but cosmetic etc VAT will be paid on purchase price not on MRP.

Manjunath Rampure S

Manjunath Rampure S (Querist)
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22 February 2017 Your replies were extremely helpful. Thank you very much.