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Vat meaning

Tejas Jasoriya (CPT clear) (284 Points)

10 September 2015

What exactly does VAT means?? Apart from book defination Plse reply really in need

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dhanamganesh@gmail.com (private service Accountant) (80 Points)
Replied 11 September 2015

sirs,madam,

vat is the simplified proceedure of previous sales tax act. feature is collecting the tax on value addition. means previous sales tax act said if there multipoint purchases all stage we pay tax on invoice value say a-b 10000, b-c-10000, c-d 10000 totally we were paying tax suppose 5% means we were paying on 3 stages totallyon taxed on 30000/- @ 5% =1500/- but in new value additon tax (VAT) we eventhough pays3 stages on 30000/- = 1500 and reimbursement of previous paid amounts are refunded as itc in a-b billed tax of 500 to c and c-d biled tax of 500 t c so, due to this our product cost will be actually 10000/- + tax of 5% only which will be 10500 to the end user.hence to avoid multiple taxation this vat is introudced. this is actual vat.

with regards

p.r.ganesh