" Value added tax ( generally known VAT ) is a sale tax and it is payable when a businessman sells goods to his customer . VAT is on the price which is added in purchase or raw material . Businessman has facility to deduct VAT ( Input ) out of VAT Output . Then he is liable to deposit net VAT to Govt. account . "
History of VAT
- VAT is applied first in mid 1960 in Brazil .
- VAT is started in European countries in 1970 .
- After this 130 countries accepted VAT .
- In India VAT on sale stage applied in 2005 . VAT at manufacturing stage is already in India for 18 years in the form of Mod VAT .
- Now , 145 countries has given acceptance for VAT .
Feature and Benefits
- It is just conversion of sale tax , earlier business paid sale tax and now pays VAT .
- It comes in existence due to defects of sale tax because sale tax law provide double tax burden on businessman .
- Saving of businessman due to a set off is given for input Tax .
- Overall tax burden will be rationalised .
- Price will decrease with ending of cascading effect .
- Higher revenue growth
So , Now you want to learn how to calculate VAT , then see below table and learn the simple system of Calculation of VAT