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How VAT Works ????
by Pankaj Jain on May 11, 2005 03:15 PM
Example A
(Rs)
Basic purchase price
10,000
Add 12.5 per cent VAT
1,250
VAT inclusive purchase price
11,250
Add overheads
100
Total
11,350
Add 20 per cent profit margin
2,270
Basic selling price
13,620
Add 12.5 per cent VAT
1,703
VAT inclusive selling price
15,323
Example B
(Rs)
Basic purchase price
10,000
Add 12.5 per cent VAT
1,250
VAT inclusive purchase price
11,250
Less VAT input
1,250
VAT free purchase price
10,000
Add overheads
100
Total
10,100
Add 20 per cent profit margin
2,020
Total
12,120
Basic selling price
13,620
Add 12.5 per cent VAT
1,703
VAT inclusive selling price
15,323
sir in ex. B u added VAT twice
1st in Basic selling price and
2nd as Add 12.5 per cent VAT
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