What is VAT Tax System How it Does Work - Sale Tax Training

Sale tax is VAT Value Added Tax system.You have hared about Sale Tax - Actually Sale Tax is a Indirect Tax which is collected in different dimensions bu today we will discussed about VAT Sale Tax Vat Stand for Value added Tax. In below lines I would like to explain this with some Examples. 

VAT Stand For : 

VAT Stand for Value Added Tax

VAT is Direct or Indirect Tax 

Vat is Actually Indirect Sale Tax which is collected on Value Addition of individual

Explanation of VAT Sale Tax with Examples 

For Example Importer Import a raw Material from anywhere in the world that is Rs. 10000, Now this Importer have to pay 17 % of this imports goods if he is register in case of Un-Register he have to pay 2 % extra Tax but we just suppose he all individual register in this example.

Let Suppose he paid 17 % of his Imports when he Purchased these Products on Rs. 10000, The Taxable Amount is Rs. 170 

Now the importer Sale the Material on Rs. 15000. According to VAT(Value Addition Tax) this individual have to pay tax on his value added amount. 

Mean the Imported Material Cost was Rs. 10000
He Sole all imported Material at Rs.15000

The Different is 5000 Now this Person will pay tax on Rs. 5000
VAT Value Added Tax Amount will be Rs. 85

This Rs. 85 is known as VAT because he have already paid tax 17% when he purchased / imported goods now the profit which is called value added amount have to be paid tax on it. 


Hope it will be cleared about Value Added Tax System. Please share your feed back about Sale Tax Training how much you find this episode useful. 

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