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VAT vs GST

EXISTING TAX SYSTEM (VAT) Vs GOODS AND SERVICES TAX SYSTEM (GST) Process 1 Process 1 Raw Material Cost Raw Material Cost Raw Materials Raw Materials (Rs.100) (Rs.100) Rs.100 10% GST -Rs.100 -Rs.10- Manufacturer buys Manufacturer buys the raw materials (Rs.10) 10% VAT Rs.100 the raw materials (Rs.10) 100 + 10 = 110 100 + 10 = 110 Process 2 Process 2 Manufacturer L Adds value to product Raw Material Cost (Rs.110) + Manufacturing Cost (Rs.40) = Rs.150 Raw Material Cost (Rs.100) + Manufacturing Cost (Rs.40) = Rs.140 Tax paid to government by Manufacturer (14 - 10 = 4) Adds value to product Cost To Manufacturer (100 + 10 = Rs.110) Manufacturer Rs.150 -Rs.14- Manufacturer sells the finished product to the distributor Manufacturer sells the finished product to the distributor 10% VAT -Rs.140- 10% GST (Rs.15) Rs.140 (Rs.14) Rs.14- 140 + 14 = 154 150 + 15 = 165 Process 3 Process 3 Manufacturer Cost (Rs.165) + Brand Label Cost (Rs.30) = Rs.195 Manufacturer Cost (Rs.140) + Brand Label Cost (Rs.30) = Rs.170 Cost To Wholesaler / Distributor (140 + 14 = 154) Tax paid to government by Distributor (17 - 14 = 3) Adds value to product Adds value_ to product Wholesaler/ Wholesaler/ Distributor Distributor Rs.195 -Rs.17 Distributor delivers the products to the retail outlets 10% GST Distributor delivers the products to the retail outlets 10% VAT -Rs.170- (Rs. 19.5) Rs.170 (Rs.17) -Rs.17 195 + 19.5 = 214.5 170 + 17 = 187 Process 4 Process 4 Distributor Cost (Rs. 214.5) + Marketing / Rent Cost (Rs.50) = Rs. 264.5 kAdds value to product Distributor Cost (Rs.170) + Marketing / Rent Cost (Rs.50) = Rs.220 Cost To Retailer (170 + 17 = 187) Tax paid to government by Retailer (22 - 17 = 5) Retailer Adds value to product Retailer Rs. 264.5 Retailer sells the product to actual customer Retailer sells the product to actual customer 10% VAT 10% GST -Rs.220- -Rs.22- (Rs. 26.45) (Rs.22) 264.5 + 26.45 = 290.95 220 + 22 = 242 Corporate Valley Process 5 Process 5 End End Cost to the Customer Retailer Cost Cost To Customer Cost to the Customer Retailer Cost (Rs. 290.95) Customer Customer (Rs.242) (220 + 22 = 242)

VAT vs GST

shared by corporatevalley on Jul 02
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Simple flow chart to understand Value Added Tax (VAT) and Goods and Services Tax (GST) in India

Designer

Sunil Kumar Mano

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Economy
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