What is the Difference Between Sales Tax and VAT ?
Answers were Sorted based on User's Feedback
Answer / r.r.jagadeesan
There are different methods of taxation in various states
and various countries in the world. This reply is posted
from Tamil Nadu, India.
The Government of Tamil Nadu has levied tax under the Tamil
Nadu General Sales Tax Act 1959. The Tamil Nadu General
Sales Tax was levied at various stages and various points.
The different points of taxation are 1. First Purchase 2.
First Sale, 3.Last Purchase. 4. Second Sale, 5. Resale.
Certain goods procured from the manufacturers or
agriculturists were treated as first purchase. Certain
goods manufactured or imported from other states or other
countries were sold locally and such sales are said to be
first sales. If such goods were purchased by other dealers
or vendors were sold by them locally is called second and
subsequent sales. If goods were levied at the point of
first sale subsequent sales are not liable for taxation as
it were treated as second sales. If the goods were
purchased from the dealers located outside the state such
purchases were called as Interstate Purchases and the goods
sold the dealers located outside the state were called
Interstate Sales. If goods were purchased locally and used
for manufacture of other end product or sold the dealers
outside the state such transactions will be treated as Last
purchase for certain commodities. If the tax suffered
goods were sold locally the sales were treated as Resale
and Resale Tax was levied on such sales. The raw material
used for manufacture of new end produce loses its
originality and hence fresh tax was levied on the new end
product without considering the sufferance of tax on raw
materials. In addition to that there are certain a
commodity on which no tax has been levied is called
Exempted. This method of taxation was called General Sales
Tax i.e. GST and CST.
The Government has introduced new method of Taxation called
Value Added Tax. Under Value Added Tax Act, each and
every point of sale Value added Tax Rate will be calculated
on the turnover each time and the difference of Tax is
called Value Added Tax i.e. on the value added sales
turnover. Tax suffered on the raw Materials used for
manufacture of an end product will be deducted as input tax
credit from the output tax payable and the difference of
tax on the sale value will be calculated. For example if a
dealer purchases goods to a value of Rs. 10000.00 paying
tax of Rs. 1250.00 (12.5% Vat) the bill amount will be Rs.
11250.00. If the dealer pays freight, loading and
unloading charges and adds certain amount of profit and
sells the same for an amount of Rs. 15000.00 he will
collect VAT of Rs. 1875.00 from the buyer and he will pay
to the department only Rs. 625.00. If the dealer
purchases goods from other states and from other countries
such goods if sold will be treated as first sales and no
CST will be allowed for deduction. Under Value Added Tax
Act the sales are categorized as 1.Exempt Sales, 2.First
Schedule sales, 3. Zero Rated Sales 4. Sales effected
through Agents/Branches in other states and purchases as
categorised as 1.Capital Goods, 2. Exempted Purchase,
3.Import, 4. Interstate purchase, 5. Local Purchase input
(First Schedule) 6. Stock receipts from Head
Office/branches/principals outside the State 7. Purchases
effected through Agents/Branches and 8. ustrial Input
|Is This Answer Correct ?||16 Yes||0 No|
Answer / h.r. sreepada bhagi
Both Sales Tax are tax on the goods sold and shown in the
In India now Sales tax has been replaced by VAT or Value
Both Sales Tax and VAT are administered by states and not by
the Central Government.
Difference between Sales tax & VAT is that under VAT the
seller can take credit of VAT paid by him on the purchases
made & pay only the excess of VAT collected on sales over
VAT paid on purchases to the Commercial Taxes Department.
Both are not applicable on Services.
Rate of Sales Tax or VAT are given in different schedules to
Sales Tax or VAT Act of each state in India.
VAT is used in more than 185 countries in the world.
|Is This Answer Correct ?||13 Yes||3 No|
Answer / shiva
slaes tax has many sub forms. vat is a part of slaes tax.
because vat is differ from scst . cst and vat are the parts
of sales tax.
|Is This Answer Correct ?||3 Yes||1 No|
Answer / supriya dasari
VAT is levied on sale of the goods and services . And VAT is
for local sales & Services only.
where as sales tax is levied on manufacturing and non
manufacturing goods when they are selling.But Sales tax is
foe central wide.
|Is This Answer Correct ?||3 Yes||3 No|
Answer / rajammal
The difference between VAT and Sales Tax:
First thing, both are apply on good and services. But there
is a difference between the both.
VAT - VALUE ADDED TAX
SALES TAX - TAX IN TAMIL NADU FORCED BY TAMILNADU STATE
This is very big chapter we are not possible to
mention all the point. The following things are only the
For under standing the difference we want to know about the
1. Sales Tax is applied by the state Government, it is
variesfrom state to state. But Vat, is a common tax for all
2. In Sales Tax, the bill must be contain the RC No. and
Area Code for the refrence. Here in VAT, those who are RC
No. want to be apply for VAT No. and those who are register
his company need to apply VAT in Sales Tax Office of the
3. In Sales Tax, the goods are classfied into different tax
rate. But in VAT, the good are only classified into 0%, 1%,
4%, 12.5%. (For future ref. see www.tnvat.gov.in website
for VAT details)
|Is This Answer Correct ?||3 Yes||7 No|
Answer / prasant
vat value added taxes and sales tax is central tax
vat collected by state govt, vat is under sales tax
|Is This Answer Correct ?||11 Yes||21 No|
Answer / shraddha
VAT is levied on goods and services whereas Sales tax is
levied ony on goods.
VAT is state tax whereas Sales tax is Central tax.
|Is This Answer Correct ?||16 Yes||32 No|
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The following information is extracted from the audited books of accounts of a chain of food stores for the period ended 31st December 2015. Revenue Statement (Trading and Profit and Loss Account for the year ended 31st December 2015. BWP’000 BWP’000 Sales 460 Cost of good sold (220) Gross profit 240 Wages 50 Other expenses 30 (80) Net Profit 160 Note: The purchase figure included in the cost of goods sold of P255 000. Balance Sheet as at 31st December 2015 BWP’000 BWP’000 Fixed Assets 400 Current assets: Stock 80 Debtors (trade) 120 Bank 400 -----  Current liabilities: Trade creditors 300 ------  300 Net Assets 700 ==== Financed by: Share capital 600 Revenue reserves 100 ------ 700 Shareholders Funds 700 ===== Required: (a) Calculate the following accounting ratios: (i) Current ratio (ii) Acid test ratio (iii) Stock turnover (in days) (iv) Debtors turnover (in days) (v) Creditors turnover (in days) (vi) Return on capital employed (ROCE) (vii) Gross profit percentage (viii) Net profit percentage (b). Give a brief comment on the performance of the company, based on the above ratios.
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