The taxing VAT
Value Added Tax or VAT in simple terms is the tax on sales payable by a dealer for the relevant tax period on the goods sold by him within the State subject to adjustment of tax paid by him on the purchases of such goods within the State and or tax paid by him on purchases of inputs within the State for manufacture of such goods. The tax on sales as mentioned above is termed as “output tax”, whereas the tax on purchases is termed as “input tax”.
In case of inter-state sales, the dealer is liable to pay Central Sales Tax (CST) and not VAT. But he cannot adjust from the CST payable the input tax paid by him. However, the input tax paid in respect of inputs for CST sales are eligible for deduction on the output tax payable by the dealer.
In case of exports, as no VAT is payable, the dealer is eligible to claim the refund of the input tax relating to such exports. This is applicable even if the dealer exports tax exempted goods.
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