HomeVAT

|

What Is Value Added Tax ( VAT)

VAT is a multi-point destination based system of taxation, with taxes being levied on the value added at each stage of transaction in the production/ distribution chain. The term ‘value addition’ implies the increase in value of goods and services at each stage of production or transfer of goods and services. VAT is a tax on the final consumption of goods or services and is ultimately borne by the consumer. To know more about concept of VAT,

Coming to to the practical aspect, Vat is a tax charged by government on each value addition by seller for profit. Vat is payable to government by seller and seller collect VAT from customers. The ultimate burden comes on the shoulder of Consumer.Below info-graphic will give you a clear picture of VAT Concept.

Info-graphic On VAT Concept

value=Concept Of VAT (Value Added Tax)

What Is Input VAT ?

Input VAT is the tax paid with purchase,the amount of tax paid on purchase invoice is called input tax.When a seller buy goods from the manufacturer or whole seller, VAT has to be paid.This tax can be claimed while he pays taxes.

What is output VAT?

Output VAT is the tax collected from the customer during the sales transaction, or this is the tax collected through sales invoice. This tax should be paid to the government after deducting input tax.

What IS VAT Payable?

VAT Payable meaning the amount of tax to be paid to the government, this is the net difference between Output tax and Input Tax, or in simple words  VAT Payable = Output Tax – Input Tax.

Which means a seller can deduct taxes he paid during his purchase in total taxes collect from the sales transaction.

What is VAT Rate?

This is the rate or percentage of taxes to be calculated and collected through customer invoice and deposited in government.Government has fixed different VAT rates for different commodities subject to change in future period.Normally Rate change is announced during the Budget summit of the State.

Hope the post will give you a clear idea on VAT concept, so as to start VAT SET-UP in Tally ERP9.

Comments (0)

Leave a Reply

Your email address will not be published. Required fields are marked *

shares
error: Content is protected !!

Related pages


input vat and output vat definitionbrs statement exampledebit note to suppliera bank reconciliation should be preparedaccrued interest entrytrial balance of balancesdebtors balance confirmation letter formathow to prepare debtors aging analysistally 9.2 erphow to record sales discount in journal entriesaxis personal bankingadvance payment journal entryform 281 tdsdebit voucher formatwhy we prepare trial balancetally consultantwhat is the meaning of debit in accountingsundry debtors in balance sheetledger confirmation lettergive journal entry for provisiondebit journal entrytds when to be deductedmeaning of debtors and creditorsbank reconciliation statement youtubeempty tally charttally versions4 types of adjusting entriesforex transactionsthe proper journal entry to purchase a computerincome tax slab rate for fy 2014 15how to deduct tdswhat is meant by debit and creditprepaid expenses journal entrytally manual pdfshort note on debenturewhat is meant by vouchertally cheque printingstaff welfare expenses formattally financial accountingdifferent types of vouchers in accountinggolden rules of accounts with examplestally financial accountingincorporation cost accounting treatmentwhat is debentures types of debenturespost dating chequestax deduction slabsbank reconciliation statement problems and solutionscarriage inwards definitionsundry items examplestally accounting tutorialinr 5000 to usdrules of journalisingpost dated cheque definitionerp tutorialsexamples of accrual accountingmemorandum of association format in wordwww tally solutions com free downloadterminologies of accountingaccounting debit and credit rulestally 9.2how to solve bank reconciliation statementexamples of ledger entries for accountingbank reconciliation manualincome tax slab rate for ay 2013 14ledger debit creditoutput vat and input vatadjusting journal entry for depreciationincome slab rate for ay 2014 15impersonal accountssales quotationssundry taxshortcut key for calculatormeaning of debtor and creditortds reconciliation formatexcel sheet shortcut keyssteps to reconcile a bank statementformat of debit note