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VAT is a system of collecting tax on every stage of production or progression or value addition which allow the business to claim or receive input tax credits and it ultimately effect or beard by the end consumer of the product or user of service, we calculate the VAT as per the rates and methods defined by the national legislation vary from place to place and how to record it in the books of accounts are mentioned in accounting for VAT, there are many impact on the country of imposing of VAT but the very common effect is the governmental income will be increase and public expenditures as well as cost of doing business will be also increase and it will lead to many other problems.
VAT is a Value added Tax on Vatable goods & services. Sometimes depending upon country decisions may be state VAT or / & central VAT.
In company VAT calculations will be as follows:
1. Calculate Input VAT (VAT Imports + Local VAT)
2. Calculate Output VAT
3. Pay net output vat or Carry forward in case VAT input is more than output.
Different nations have different rules, exemptions, rebates etc...
it is end user taxation, as a company we pay tax & take inout credit and we will net off with output tax, as it is a chain of input, output links until it reaches the end consumer.
if there is a value addition (in the way of profit & cost increase) in each lever the price of product will increase as it will increase the tax amount.
A value-added tax (VAT) is a type of consumption tax that is placed on a product whenever value is added at a stage of production and at the point of retail sale. The amount of VAT that the user pays is on the cost of the product, less any of the costs of materials used in the product that have already been taxed. It can be calculate on the basic price + the rate of VAT.
VAT is value added tax and its calculate on the basis of basic price. VAT as per the rates and methods defined by the national legislation vary from place to place and how to record it in the books of accounts are mentioned in accounting for VAT.
