My society got a govt.tender.As per tender document,govt.reimburse all the expenses exluding of taxes.I want to know that if i got a bill of something and in the paticuler bill VAT is added in that bill.Is govt.reimburse the expense with VAT or not?
1 Replies
MJ Krishnamurthy
(ACCT(Retd))
(7197 Points)
Replied 09 July 2012
Mr Zuber Khan,,
The govt itself can not say that it will not pay VAT on the sale made to it as per the tender.Reimbursement of expenses and payment of taxes are two diffrent items and they should be understood properly. Reimbursements of expenses such as conveyance,testing, installation,etc are additional in nature to the value of goods and the govt has agreed to meet those expenses by way of reimbursement. In the case of VAT,it is compulsory for any seller to charge and collect and for the buyer to pay. So it is never mentioned as a reimbursible expense. You should charge VAT at the applicable rate in the invoice and it is included in the price.The govt will pay that also........MJK
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