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What is VAT? How is VAT computed?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 ankit agarwal asked almost 3 years ago

What is VAT? How is VAT computed?

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6 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered almost 3 years ago

Value Added Tax (VAT) is a modern and progressive form of sales tax. It is charged and collected by dealers on the price paid by the customer. VAT paid by dealers on their purchases is usually available for set-off against the VAT collected on sales. Computation of VAT: In simple words, VAT = Output Tax – Input Tax Now let’s see how Input and Output Tax are calculated: Input VAT: Amount paid by a buyer as a percentage of cost price for goods/services used to make a final product Say the Cost Price of a goods/services is = INR 100 Assuming the VAT rate to be 12.5%, Input VAT (VAT paid during buying) = INR 12.50 Output VAT: Amount received by a seller as a percentage of the selling price of the final product Say the Selling Price of the Product is = INR 200 Output Tax (VAT collected during resale) = INR 25

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 lochan answered almost 3 years ago

VAT is the short form of Value Added Tax.VAT is the tax that has replaced the earlier levy of Sales Tax. Under the earlier first point system of levy of tax, the manufacturer or the importer of goods into the State was liable to sales tax. There was no levy of sales tax on the further distribution channel.VAT, in simple terms, is a multi point levy on each of the entities in the supply chain with the facility of set off of Input Tax i.e., the tax paid at the stage of purchase of goods by a trader and on purchase of raw materials by a manufacturer. i.e., only the value addition in the hands of each of the entities is subject to tax.The levy of VAT is administered by the Goa Value Added Tax Act, 2005 and the rules made thereunder. Input VAT: Amount paid by a buyer as a percentage of cost price for goods/services used to make a final product Say the Cost Price of a goods/services is = INR 100 Assuming the VAT rate to be 12.5%, Input VAT (VAT paid during buying) = INR 12.50 Output VAT: Amount received by a seller as a percentage of the selling price of the final product Say the Selling Price of the Product is = INR 200 Output Tax (VAT collected during resale) = INR 25 VAT Payable: VAT Payable = Output VAT – Input VAT = INR ( 25 – 12.50) = INR 12.50 VAT is therefore calculated by deducting tax credit from tax collected during the payment period. Thanks

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Amit Goyal answered almost 3 years ago

Hello Ankit Ji , As Far as your query is concerned with What is VAT? How is VAT computed? Let me informed That **`VAT`** Is : - [1] VAT Means Value Added Tax. [2] it is tax On The Sales Of The Goods. [3] It is Charged And collected By The Dealer who sells to the Consumer. [4] it is Borne Finally By Consumers. [5] it is Regarded as Consumption Tax. Then **`How is VAT Computed.`**. [1] Genrally a Simple Formula . [2] VAT = Output Tax - Input Tax Credit Thanks With Best Regards Amit Goyal

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 santhanabharathi answered almost 3 years ago

Hi Ankit VAT is Value Added Tax.If you purchase any product it includes VAT. VAT is computed in the cost of goods at applicable percentage.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Aarti Vadnerkar answered almost 3 years ago

What is vat? Value Added Tax (VAT) is a modern and progressive form of sales tax. It is charged and collected by dealers on the price paid by the customer. VAT paid by dealers on their purchases is usually available for set-off against the VAT collected on sales. Computation of VAT: In simple words, VAT = Output Tax – Input Tax Now let’s see how Input and Output Tax are calculated: Input VAT: Amount paid by a buyer as a percentage of cost price for goods/services used to make a final product Say the Cost Price of a goods/services is = INR 100 Assuming the VAT rate to be 12.5%, Input VAT (VAT paid during buying) = INR 12.50 Output VAT: Amount received by a seller as a percentage of the selling price of the final product Say the Selling Price of the Product is = INR 200 Output Tax (VAT collected during resale) = INR 25 VAT Payable: VAT Payable = Output VAT – Input VAT = INR ( 25 – 12.50) = INR 12.50 VAT is therefore calculated by deducting tax credit from tax collected during the payment period. QB_bucket3_women_2_INDIA_300x250 Remember: • If you are registered for VAT, you are liable to pay VAT only at one stage, when you are selling the product • You would have paid VAT while purchasing goods from your suppliers. This VAT will not be your cost as you will deduct a corresponding amount from tax on your sales.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Prity answered almost 3 years ago

What is VAT? How is VAT computed? What is VAT? Each commodity passes through different stages of production and distribution before finally it reaches the Consumer. Some value is added at each stage of the production and distribution chain. Value Added Tax (VAT) is tax on value addition at each stage. Under VAT system, a dealer collects tax on his sales, retains the tax paid on his purchase and pays balance to the Govt. Treasury. It is a consumption tax because it is borne ultimately by the final Consumer. The tax paid by the dealer is passed on to the buyer. It is not a charge on the dealer. Hence, VAT is a multipoint tax system with provision for set off of tax paid on purchases at each point of sale. How is VAT computed? The dealer pays VAT by deducting the tax paid on purchases (input tax) from his tax collected on sales (output tax). Hence, VAT = Output Tax – Input Tax. For example: A dealer pays Rs.10.00 @ 10% on his purchase price of goods valued Rs.100.00. He sells the goods at Rs.150.00 and collects tax amounting to Rs.15.00 (@ 10%). He will pay Rs.5.00 (Rs.15.00- Rs.10.00) as he has already paid Rs.10.00 to his seller while purchasing those goods.

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