Chetan D. (Management Accountant) (89 Points)
28 October 2009Dear All,
Suppose there is company X LTD which produces some Consumer Goods. And There is Y Associates which is a sister concern of X Ltd. That Y Asso. purchase goods from X Ltd. in wholesale. It resells it to its Retail counters in wholesale amount + 5% markup. Those retail counters sells goods with 10% markup to ultimate customers i.e. ((RS 100 + 5%)+ 10%). So on what amount we should charge VAT???
Thanks
Chetan
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 28 October 2009
see Mr chetan what amout is charged in the bill to consumers vat will be added on to that see the very purpose of vat is only to remove the cascading effect in the 1ST Instance if some input credit is there the same may be adjusted and the final consumer will not suffer for this cascading effect but the margins gets added when one change hands until it reaches the final consumer .Coming to the second question if your MRP is the selling price then vat is charged on Rs 118 .if any discounts is given on MRP then vat will be charged after discount.Hope I made clear whatever little i know on VAT
Excel Mastery Program
CAclubindia
