How Vat is Calculated?

Output VAT is calculated based on the Gross Taxable Sales and deducted to Input VAT which is based on the Gross Taxable Purchases. The difference will be the VAT Payable for the period. In case Input VAT is higher than the Output VAT, the excess Input VAT is used as a tax credit and  carried forward to the next taxable period.

VAT is applicable on Vatable Sales. VAT amount is calculated at the specified VAT rate on the taxable value of the sales item. For example for vatable goods of Rs 100 having 5% rate of VAT will be Rs 5. and the total amount of Goods for sale is Rs 105/-.

For Purchaser it will be Input VAT and for Seller it will be output vat.