Answer / malaya2100

1) Vat should be calculated on the net amount. e.g net
amount Rs.5000/- and vat rate according to your
applicability whether 4%/5%/12.5%.

Net amount = 5000
Vat = 200 (Taken 4%)
Total = 5200 (including Vat)

i) (in case of Sales)

Abc a/c dr Rs.5200
To Sales Rs.5000
To vat Rs.0200

ii) (in case of Purchases)

Purchases a/c Dr.5000
Vat a/c Dr.0200
To Abc a/c dr Rs.5200

2) Service Tax should be charged if taxable service provided
and mentioned in the invoices otherwise not.

NOTE : VAT and Service Tax are mutually exclusive taxes can
not charge both on at a time. So, there must be service
charges mentioned to charge service Tax.

Regards,
Malaya2100

Answer / bharathi

In some organisations (for example car or two wheeler
service centre) they will provide spares for the vehicles
as well as service for the vehicle. Vat to be charged for
the spares they provided for example 10,000 + VAT To be
charged on Rs.10000 + 5% VAT = 500 Total 10500 + Labour
Charges or Service Charges for the Services rendered
Rs.2000 + Service Tax Rs.247.20 = Total 2247.20 Total
Bill cost Rs.12747.20

Service Tax = Rs.247.20
VAT = Rs.500

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