VALUE ADDED TAX (VAT)

Presentation by A. Raghavendra

VAT Terminology
 

VAT Value Added Tax This is the new system being implemented from April 1, 2005 in A.P and other states. Unlike, Sales Tax, VAT is calculated based on Input & Output variation.

INPUT TAX
You are GST-registered; GST The goods or services have been supplied to you or


the goods have been imported by you;

 The goods or services are used or to be used for the

purpose of your business;

 The input tax is directly attributable to taxable

supplies or out-of-scope supplies which would be taxable if made in foreign country;

VAT Terminology Input Tax



Input Tax is the Tax shown in our purchase bills. As per the norms, every trader need to show Tax separately and it is considered as Input Tax. Apart from Trade Purchases, Tax on Capital Goods purchases like A.C., Computers etc.. is also considered for this Input Tax.

VAT Terminology Output Tax

OUTPUT TAX  Output Tax is the Tax charged on all the Taxable sales of a Vat Dealer.
Output Tax is the Tax charged on all the Taxable sales of a Vat Dealer.

For Ex. Tax shown by us our Output Tax and it becomes Input Tax for our customer.

VAT Applicability


Below 5 Lakhs turnover No Tax & No. Regulation required. 5 40 Lakhs Total amount will apply & VAT is optional. Above 40 Lakhs VAT will apply.

VAT Rates


   

There are three main rates for Input and Output Vat tax. 0% for Agriculture products. 1% for Jewellery 4% for Pharma, Computers, Soaps etc. Pharma, 12.5% for FMCG, Automobile

Input Tax Amount Calculation

For ex:  Month Purchases Gross Value X Rate of Tax  Input Tax = 10,00,000 * 0.04 = 40,000/40,000/ Purchases, includes Trade purchases and Capital Goods purchases as per the existing VAT Rate.

Output Tax Amount Calculation

  

Month Sales X Rate of Tax Output Tax = 20,00,000 * 0.04 = 80,000/80,000/On the invoice, we should show, Items Amount, VAT Value and Total Value In case of discounts, it should be given before VAT.

Net tax payable person's The person's net tax payable is the amount worked out using the formula: Net tax payable = OUTPUT tax INPUT tax

THANK YOU
A