Vat tax
ikramuddin
(Querist) 01 August 2012
This query is : Resolved
Dear Sir, My friend's brother is registered junk dealer,he purchase scrap from unregistered persons in Rs.44/- kg.(without bill/tax)
& Sale it rs.45/- per kg. by Tax invoice(Tax Rate is 5%), hence, his profit is Re.1/- per kg.
in June month- He purchase 20000kgs. scrap@44/-of Rs. 880,000/-(without bill/tax) , Sale it @45/- in Rs.900000/- (indirectly his profit is Rs.20000) but he paid VAT Rs. 45000/@5% on Rs.900000/- now his los is Rs.(45000-20000)25000/- Now my question is how he should billing or business? Hence his C.A. says billing (sale) should be rs.45/-(Actual Rate) per kg.
R Trivedi
(Expert) 02 August 2012
VAT transaction as of now is credited for same state purchase only.
For example if you had purchase @ Rs 44/Kg on bill, then the tax amount @5% would be Rs.2.2 so effective purchase price would be Rs. 44+ Rs 2.2 = Rs. 46.2.
Now if you had sold it at the @ Rs 45 then tax amount would be Rs. 2.25, but you would pay to tax department only 2.25 - 2.2 = 0.05 per Kg.
Thus your effective gain would be Rs. 1 per Kg. In the era of VAT, doing business in a state without bill is not gainful. May be scrap business is typical.
