What is meant byVAT.
A value added tax (VAT) is a consumption tax added to a product's sales price. It represents a tax on the "value added" to the product throughout its production process. In our daily life, we buy many kinds of good from the market where the shopkeeper buys either from the wholesalers or directly from the manufacturers. In order to earn money, shopkeepers sell the goods at a higher price from which they bought. The price at which the shopkeeper buys the good is called Cost Price and the price at which the shopkeeper sell the goods is called Selling Price. When selling price is more than the cost price the shopkeeper earns a Profit and when the selling price is less than the cost price the shopkeeper suffers a Loss. Sometimes shops offer Discount on goods which is deducted from the selling price of the item.
The government charges sales tax on the selling price of an item, which is included in the bill. This added tax is known as Value Added Tax or VAT which is a Multi-Stage Tax with the following stages:
Manufacturer -> Distributor -> Wholesaler -> Retailer -> Consumer.
In our daily life, we buy many kinds of good from the market where the shopkeeper buys either from the wholesalers or directly from the manufacturers. In order to earn money, shopkeepers sell the goods at a higher price from which they bought. The price at which the shopkeeper buys the good is called Cost Price and the price at which the shopkeeper sell the goods is called Selling Price. When selling price is more than the cost price the shopkeeper earns a Profit and when the selling price is less than the cost price the shopkeeper suffers a Loss. Sometimes shops offer Discount on goods which is deducted from the selling price of the item.
The government charges sales tax on the selling price of an item, which is included in the bill. This added tax is known as Value Added Tax or VAT which is a Multi-Stage Tax with the following stages:
Manufacturer -> Distributor -> Wholesaler -> Retailer -> Consumer.
