VALUE ADDED TAX (VAT)

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VALUE ADDED TAX (VAT) Pharmasoft

• A
• Presentation by
• Essel Software Services Ltd.

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VAT Terminology

• VAT Value Added Tax -
• This is the new system being implemented from
  April 1, 2005 in A.P and other states.
• Unlike, Sales Tax, VAT is calculated based on
  Input Output variation.

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VAT Terminology Input Tax

• INPUT TAX
• Input Tax is the Tax shown in our purchase bills.
  
• As per the norms, every trader need to show Tax
  separately and it is considered as Input Tax.
• Apart from Trade Purchases, Tax on Capital Goods
  purchases like A.C., Computers etc.. is also
  considered for this Input Tax.

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VAT Terminology Output Tax

• OUTPUT TAX
• Output Tax is the Tax charged on all the Taxable
  sales of a Vat Dealer.
• For Ex. Tax shown by us our Output Tax and it
  becomes Input Tax for our customer.

Output Tax is the Tax charged on all the Taxable
sales of a Vat Dealer.
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VAT Applicability

• Below 5 Lakhs turnover No Tax No. Regn
  required.
• 5 40 Lakhs TOT will apply VAT is optional.
• Above 40 Lakhs VAT will apply.

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VAT Rates

• There are three main rates for Input and Output
  Vat tax.
• 0 for Agriculture products.
• 1 for Jewellery
• 4 for Pharma, Computers, Soaps etc.
• 12.5 for FMCG, Automobile

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Input Tax Amount Calculation

• Month Purchases Gross Value X Rate of Tax
• For ex.
• Input Tax 10,00,000 0.04 40,000/-
• Purchases, includes Trade purchases and Capital
  Goods purchases as per the existing VAT Rate.

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Output Tax Amount Calculation

• Month Sales X Rate of Tax
• Output Tax 20,00,000 0.04 80,000/-
• On the invoice, we should show, Items Amount, VAT
  Value and Total Value
• In case of discounts, it should be given before
  VAT.

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Tax Credit

• If Input Tax is greater than Output Tax, then we
  should not pay Tax to Government.
• This amount will be carried forward to the next
  month. This is the Tax Credit Amount.
• Input Tax 1,00,000/-
• Output Tax 50,000/-
• Tax Credit Input Tax Output Tax 1,00,000
  50,000 50,000/-

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Opening Stock Tax Calculation

• Opening Stock Tax Claim should be submitted by
  7th April 2005.
• Submitted before 30th, is subjected to acceptance
  of Dept.
• Submitted after 30th, are not allowed for Tax
  Claim.
• VAT Claim Form 115 Need to be submitted.
• Tax Computation based on previous sales tax rate.
• If Trader has bill with Tax shown clearly, it is
  considered for 100.
• If Trader has inclusive Tax Bill, 90 of bill
  value is considered for Calculation.

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Opening Stock Tax Calculation

• For Ex 10 Lakhs with 10 SST - 1 Lakh as Opening
  Stock VAT Claim.
• Opening Tax Credit arrived can be re-deemed as
  follows
• Opening Stock tax will be deducted between Aug
  2005 Jan 2006 as 6 monthly installments.
• If still, credit is there after Jan 2006, it will
  be carried forward and it can be adjusted upto
  Jan 2008.
• If still additional amount is there, it will be
  paid by Govt in Mar 2008

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Tax Amount Calculation

• Output Tax (Input Tax Tax Credit Opening
  Stock Vat Adjustment Amount)
• VAT Equation
• Sales Value Purchase Value G.P X VAT Rate.
• Tax Paid Date
• If not paid by 20th of the month then 5000/-
  penalty

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Example
Opening Stock Value Opening Stock Value 6,00,000
Tax Rate 10
Claimed 60000

Month Purchases Sales Input Tax Output Tax Tax Payable Opening Stock Tax Credit
April 50000 60000 2000 2400 400 0 0
May 100000 200000 4000 8000 0 0 -4000
June 100000 80000 4000 3200 0 0 -4800
July 100000 80000 4000 3200 0 0 -5600
August 100000 80000 4000 3200 0 10000 -16400
September 100000 80000 4000 3200 0 10000 -27200
October 100000 120000 4000 4800 0 10000 -36400
November 100000 80000 4000 3200 0 10000 -47200
December 100000 80000 4000 3200 0 10000 -58000
January 100000 130000 4000 5200 0 10000 -66800
February 100000 80000 4000 3200 0 0 -67600
March 100000 100000 4000 4000 0 0 -67600
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Tips for VAT Accounting

• In March 2005, it is suggested to reduce the
  stocks and do not purchase, unless, it is urgent.
  This way, we can reduce opening stocks for New
  Fin. Year.
• In April, May, June, July, We suggest to maintain
  balance of Purchases and Sales, which helps to
  plan Tax in a better way.
• From August onwards, you can reduce purchases, as
  Opening Stock Credit will be used from these
  months.

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VAT PHARMASOFT

• Following Forms are provided in Pharmasoft
• VAT Form 115 Opening Stock Claim Form
• VAT Form 200 Monthly VAT Returns
• VAT Form 200 B Year VAT Returns
• VAT Form 007 TOT Returns.

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VAT PHARMASOFT

• Pharmasoft Customers can easily handle VAT
  Operations without any problem with the latest
  version released.

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VAT PHARMASOFT

• THANK YOU
• A Presentation of Essel Software Services Ltd.