Transcript VALUE ADDED TAX (VAT) & Pharmasoft

PART THREE
VALUE ADDED TAX
VAT Terminology
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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.
VAT Terminology – Input Tax
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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
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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.
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For Ex. Tax shown by us our Output Tax and it
becomes Input Tax for our customer.
Features of Value Added
Tax
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Accurate VAT calculation
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Determine VAT Liability/Refund
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Meets all accounting and statutory
norms
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Statutory VAT & CST Reports
VAT Applicability
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Below 5 Lakhs turnover – No Tax & No. Regn
required.
5 – 40 Lakhs – TOT will apply & VAT is
optional.
Above 40 Lakhs – VAT will apply.
VAT Rates
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There are three main rates for Input and Output
Vat tax.
0% for Agriculture products.
3% for Small scale taxpayer
13% for Some special goods, for example
books .
17% for The general taxpayer
Input Tax Amount Calculation
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Month Purchases Gross Value X Rate of Tax
For ex.:
Input Tax = 10,00,000 * 0.04 = 40,000/Purchases, includes Trade purchases and
Capital Goods purchases as per the existing
VAT Rate.
Output Tax Amount Calculation
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Month Sales X Rate of Tax
Output Tax = 20,00,000 * 0.04 = 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.
Tax Credit
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If Input Tax is greater than Output Tax, then
we should not pay Tax to Government.
This amount will be carried forward to the next
month. This is the Tax Credit Amount.
Input Tax 1,00,000/Output Tax 50,000/Tax Credit = Input Tax – Output Tax =
1,00,000 – 50,000 = 50,000/-
Opening Stock Tax Calculation
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Opening Stock Tax Claim should be submitted by 7th
April 2005.
Submitted before 30th, is subjected to acceptance of
Dept.
Submitted after 30th, are not allowed for Tax Claim.
VAT Claim Form 115 Need to be submitted.
Tax Computation based on previous sales tax rate.
If Trader has bill with Tax shown clearly, it is
considered for 100%.
If Trader has inclusive Tax Bill, 90% of bill value is
considered for Calculation.
Opening Stock Tax Calculation
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For Ex: 10 Lakhs with 10% SST - 1 Lakh as Opening
Stock VAT Claim.
Opening Tax Credit arrived can be re-deemed as
follows:
Opening Stock tax will be deducted between Aug
2005 – Jan 2006 as 6 monthly installments.
If still, credit is there after Jan 2006, it will be carried
forward and it can be adjusted upto Jan 2008.
If still additional amount is there, it will be paid by
Govt in Mar 2008
Tax Amount Calculation
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Output Tax – (Input Tax + Tax Credit +
Opening Stock Vat Adjustment Amount)
VAT Equation
Sales Value – Purchase Value = G.P X VAT
Rate.
Tax Paid Date
If not paid by 20th of the month then 5000/penalty
Example
Opening Stock Value
6,00,000
Tax Rate
10%
Claimed
60000
Month
Purchases
Sales
Input Tax
Output Tax
Tax Payable
Opening
Stock
Tax Credit
April
50000
60000
2000
2400
400
0
0
May
100000
200000
4000
8000
0
0
-4000
June
100000
80000
4000
3200
0
0
-4800
July
100000
80000
4000
3200
0
0
-5600
August
100000
80000
4000
3200
0
10000
-16400
September
100000
80000
4000
3200
0
10000
-27200
October
100000
120000
4000
4800
0
10000
-36400
November
100000
80000
4000
3200
0
10000
-47200
December
100000
80000
4000
3200
0
10000
-58000
January
100000
130000
4000
5200
0
10000
-66800
February
100000
80000
4000
3200
0
0
-67600
March
100000
100000
4000
4000
0
0
-67600
Tips for VAT Accounting
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In March 2005, it is suggested to reduce the stocks
and do not purchase, unless, it is urgent. This way,
we can reduce opening stocks for New Fin. Year.
In April, May, June, July, We suggest to maintain
balance of Purchases and Sales, which helps to plan
Tax in a better way.
From August onwards, you can reduce purchases, as
Opening Stock Credit will be used from these months.
THANK YOU