Raj Saini wrote:
Just trying to understand it. How does the VAT applied to purchase? Is
purchase not some other party's sale and are they not responsible for
collecting tax on their sales? Here in India, we have VAT as well.
AFAIK, VAT is applied to the value added and not the sales prices
because part of the tax is already collected by the previous sale.
Raj
Yes, you collect taxes from customers when you sells items; you pay
taxes to the suppliers when you buy stuff; the difference is what you
pay to the government...
The example in the link I sent in the first post is very useful:
http://en.wikipedia.org/wiki/Value_added_tax
Jacopo
