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[How-To] Calculate VAT (India)

Thursday, 19 August 2010, 8:08 | How-To, India | 1 Comment | Read 1769 Times
by Vaibhav Pandey

The essence of VAT is in providing set-off for the tax paid earlier, and this is given effect through the concept of input tax credit or rebate. The Input tax credit in relation to any period means setting off his Output tax. The value addition to the goods, and the related VAT liability of the dealer is calculated by deducting input tax credit from tax collected on sales during the payment period

Provision Illustrated:

Mr. Shri purchases input worth Rs. 22,00,000 and record sales of Rs. 27,00,000 in the month of January 2010. Input tax rate and output tax rate is 12.5 %. Compute Input tax credit.

Input procured within the State (a) Rs. 22,00,000

Output Sold in the month (b) Rs. 27,00,000

Tax collected @ 12.5% on (b) (c) Rs. 3,37,500

Input tax paid @ 12.5% on (a) (d) Rs. 2,75,000

VAT payable during the month (c)-(d) Rs.62,500

Also for those of you who do collect VAT in India, The last date for payment of VAT collected in July’ 2010 is 20th August, 2010.

Also Read: Due Dates for Payment of VAT fast approaching!

[If you have any doubts about VAT and other Taxation stuff in India, please feel free to reach out to Robin Moses, CEO and Founder of Reach Pro Pvt. Ltd. Checkout their website at]

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