FAQS on Sales Tax Compliance
Q1: What does VAT imply?
Value Added Tax is basically the consumption tax on goods by the consumers that needs to be borne by the consumers.
Q2: Does Value Added Tax System makes the procedure of maintaining the Book of Accounts complex?
Value Added Tax doesn’t make the book maintenance procedure complex. Instead, it simplifies the process for the dealer. As the dealer is supposed to maintain two registers- Sales Book and Purchase Book. In Sales Book, sales made and tax collected from the purchaser are recorded chronologically whereas in purchase book, purchases made and tax paid on such purchases are recorded.
Q3: Can VAT system work on items which have prescribed MRP inclusive of tax?
MRP can be inclusive of tax, thus VAT system works on items with prescribed MRP inclusive of tax. In order to calculate the tax component and tax exclusive price, tax fraction [r/(r+100) where r is the tax rate] on the MRP can be applied.