Kylie buys an article for Rs. 10000 and pays 7% tax. He sells the same article for Rs. 13000 and charges 9% tax. Find the VAT paid by Kylie?

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Mohamed Fatin Nizami

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For Purchase Kylie will pay 7% on 10000 = Rs. 700 On Sales, he will pay ( 9% on 13000) - 700= 1170-700= Rs. 470.
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In simple words, Value Added Tax = Output Tax -- Input Tax. Now let’s see how Input and Output Tax are calculated: Input VAT: Amount paid by Kylie (buyer) as a percentage of cost price for goods/services used to make a final product Given, the Cost Price of a goods/services is = INR 10000 Given, the...
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In simple words, Value Added Tax = Output Tax – Input Tax. Now let’s see how Input and Output Tax are calculated: Input VAT: Amount paid by Kylie (buyer) as a percentage of cost price for goods/services used to make a final product Given, the Cost Price of a goods/services is = INR 10000 Given, the VAT rate(which Kylie has paid) is 7%, Input VAT (VAT paid during Kylie buying the article) = INR Rs. 700. Output VAT: Amount received by a Kyile (now seller) as a percentage of the selling price of the final product. Given, the Selling Price of the Product by Kylie is = INR Rs. 13000. Then, Output Tax (VAT collected by Kylie with 9% during resale) = INR Rs. 1170. VAT Payable: VAT Payable = Output VAT – Input VAT = INR ( 1170 – 700) = INR Rs. 470 The INR Rs. 470 is paid by Kylie. Remember:- • If you are registered for VAT, you are liable to pay VAT only at one stage, when you are selling the product • You would have paid VAT while purchasing goods from your suppliers. This VAT will not be your cost as you will deduct a corresponding amount from tax on your sales. read less
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