|Various Tax Implementation.
Value- Added Tax, by definition, is a tax imposed solely on the extra value added by the dealer to the good being traded. This is enabled by creating a distinction between input and output tax, and making the dealer liable to pay only the difference between the two amounts. It is a multi-point tax, which means it is imposed every time the good is traded from one dealer to the next in the entire production-distribution-retail chain. It is only at the point of purchase by final consumer from retailer that the chain ends.
Value Added Tax is applicable to the trade/ transfer of a good within state; it is not applied on services. The tax charged on the transaction will equal the tax rate multiplied by the value of taxable sales. Output Tax is the tax that you will charge on sale of a good, collected as part of the sale price from your customer. Input Tax is the tax that you have paid to your supplier for the input good, i.e. the part of your cost price from him which went toward taxes charged. Now, the Net Tax is the output tax collected minus the input tax paid. In case your input tax exceeds output tax, you will be entitled to a tax refund.