what is full form of vat?
VAT FULL FORM– Value Added Tax
VAT full form is Value Added Tax is an indirect tax that is imposed on tangible goods and product. If we see it from customer point of view, it is the tax on purchase price of products. From the seller’s point of view, it is a tax on the price of product. Here, seller charges tax amount of vat from the customer on those products that are sold by him. After collecting the tax, seller has to submit tax amount to government department of that specific period. Tax amount of vat is submitted quarterly in Delhi as per Dvat Rule (Delhi Value Added Tax Rule) . The main purpose of vat tax is to generate revenues for the government department.
Important dates of vat challan and return:
According to Delhi value added tax rule, every company that comes under vat rule have to submit his tax challan 21th of the next month. If I tell you about the submission process of return. The tax return is submitted quarterly on 25th of next month of every quarter.
Registration under vat ( vlue added tax) :
Every company that purchases material or goods for the purpose of selling has to register under vat rule. Here it is necessary to notice that every state have their regulation and turnover level (thresholds limit) at which registration becomes compulsory. The registered company in Dvat act has to deduct vat tax on goods that is sold by them to their customer. After that, company has to submit vat tax amount to government departments.
Example: If xyz private ltd. Deals in electronic product. It sells a laptop to john the price of 10,000 Rs. , then xyz private ltd. Have to deduct 5% vat amount according to vat rule.( There are different % for vat tax amount like 5%, 12% and 20% for different kind of goods) . Then the bill amounts of that laptop will be10, 500 Rupees.
Here the original cost of goods is 10,000 Rupees and vat tax amount is 5% of 10000 Rupees that is 500 Rupees, then bill amount is 10,500 Rupees.
Entry for the above sale transaction is as follow:
Party’s Account 10,500 -Dr
To Sale Account 10,000 -Cr
To Output Vat Account 500 -Cr
Type of vat tax:
After knowing the vat full form , it is important to know about types of vat tax. There are two type of vat tax- input vat and output tax. Input vat is a tax amount that is imposed on purchase of goods. On the country, Output vat is a tax amount that is imposed on sale of goods and the difference in between both is called vat payable. Vat payable is the tax amount that seller have to submit to tax department according to rule. The basic formula for calculating vat payable is as below:
|Vat payable = output tax – input tax|
Other Vat Full Form :
♦Virtual Allocation Table
♦Vermont Agency of Transportation
♦Vertical Angle Theorem