How To Calculate VAT

In simple words, VAT = Output Tax – Input Tax
Now let’s see how Input and Output Tax are calculated:

Input VAT: Amount paid by a buyer as a percentage of cost price for goods/services used to make a final product
Say the Cost Price of a goods/services is = INR 100
Assuming the VAT rate to be 12.5%,
Input VAT (VAT paid during buying) = INR 12.50

Read More: How To Apply For A TIN Number, How To Register For VAT in India, How to Apply For a TAN

Output VAT: Amount received by a seller as a percentage of the selling price of the final product
Say the Selling Price of the Product is = INR 200
Output Tax (VAT collected during resale) = INR 25

VAT Payable:
VAT Payable = Output VAT – Input VAT
= INR ( 25 – 12.50) = INR 12.50
VAT is therefore calculated by deducting tax credit from tax collected during the payment period.

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.

You can also find many VAT calculators online, such as www.vatcalconline.com, www.easycalculation.com/finance/vat.php, etc.
We would however urge you to check with your accountant before using the afore-mentioned sites