Is it correct to state tht VAT usually increases the retail price as the tax is payable on first sale price ?
In Vat,tax is payable on all sales and not only the first sales Price
A sold goods to B for 100000+5% vat=5000
B sold it further for 120000+5% Vat=6000
In this case,
Vat Payable by A=Output Vat-Input Vat=5000-0=5000
Vat Payable by B=Output Vat-Input Vat=6000-5000=1000
Total Vat Paid to Govt=
5000 by A+1000 by B=6000
Hence,Vat does not increase retail price as it is only on value addition made by person and not whole amount
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