VAT CST BASICS

Tax Practical
Practical VAT CST

What is Vat?

Vat is a tax on Sale of Goods within State in India

What is Input Vat and Output Vat?

Vat on Purchase is called Input Vat

Vat on Sale is called Output Vat

What is Vat Payable?

Vat Payable=Output Vat-Input Vat

Case 1

Suppose a dealer makes purchases and sales as follows

Purchase

 A LTD Purchase 40000 Vat 5% 2000 42000

Sales

 X LTD Sale 60000 vat 5% 3000 63000

What is

Input Vat

Output Vat

Vat payable?

Case 2

Suppose a dealer makes purchases and sales as follows

 B LTD Purchase 80000 Vat 12.5% 10000 90000

 Y LTD Sale 60000 Vat 12.5% 7500 67500

What is
Input Vat
Output Vat
Vat payable?

What is Vat Credit

If Input is more than Output,this is called Vat Credit

In case 2

Vat Credit=10000-7500=2500

This Vat credit is added to Input Vat of next period

There can be either

Vat Payable

or

Vat Credit

In Case 1,there is Vat Payable

but

in Case 2,there is Vat Credit

Case 3

Suppose there are 2 types of purchase and sales

Purchases

 A LTD B LTD Purchase 40000 Purchase 80000 Vat 5% 2000 Vat 12.5% 10000 42000 90000

Sales

 X LTD Y LTD Sale 60000 Sale 60000 vat 5% 3000 Vat 12.5% 7500 63000 67500

What is

Input Vat
Output Vat
Vat payable?

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