VAT online calculator


Read this article to understand VAT definition with an example and for online VAT calculator.

Meaning of VAT (Value Added Tax)


VAT stands for Value Added Tax. It is levied at each stage in the sale chain initiating from manufacturer till reaching in the hands of consumer. It is levied on difference between the final sale amount and amount on which tax is already tax. In other words, you can say that it is levied on sale price (including profits) lesspurchase price.



Let's understand the process of VAT with the help of a simple example:
Mr. A is manufacturer.
Mr. B is wholesaler.
Mr. C is retailer.
Mr. D is consumer.
Tax is 10%.

Mr. A sold an item to Mr. B for Rs. 100. Thus tax paid by Mr. B is Rs. 10. Mr. B sold it to Mr. C for Rs. 120. Tax on Rs. 100 is already paid. So now Mr. C will pay tax only on Rs. 20 (Rs. 120- Rs. 100) @ 10%. This comes to be Rs. 2. Mr. C sold it for Rs. 150 to Mr. D. tax on Rs. 120 is already paid. So now Mr. D will pay tax on Rs. 30 (Rs. 150- Rs. 120). This comes to be Rs. 3. In this way, the total tax paid on that item is Rs. 10 + Rs. 2 + Rs. 3 = Rs. 15 (which is also 10% of final sale amount Rs. 150).

How to calculate VAT


Here we are lending you help to calculate VAT online.

1. Take the purchase price.
2. Calculate VAT on purchase.
3. Now take sale price.
4. Calculate VAT on sale.
5. VAT payable is step 2 minus step 4.

For online calculation of VAT, download the below mentioned file.


Attachments

  • VAT online calculator (3891-212242-vat.xls)
  • More articles: Sales tax

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