Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ACCOUNTING STANDARD :: VAT RATES :: cpt :: empanelment :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: list of goods taxed at 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: articles on VAT and GST in India :: due date for vat payment :: Central Excise rule to resale the machines to a new company :: form 3cd :: TDS
 
 
VAT (Value Added Tax) »
 GST regime: VAT Commissioner and CBEC to work with businesses
 Amendments in the Second Schedule appended to the Act (Delhi Value Added Tax Act, 2004)
 Guidelines relating to downloading of Statutory Forms-Modification thereof
  Grant of Registration under DVAT & CST
 VAT on petroleum products to continue, to be decided by GST Council
 Government rolls out settlement scheme to clear VAT, CST dues
 Maharashtra government offers VAT benefit to realty buyers
 Govt should focus on income tax instead of VAT
 Amendments in the second Schedule received from Finance Deptt.
 VAT exemption stays in tax reform bill
 Income Tax Appellate Tribunal Bangalore Banches Bangalore 'A' Bench DB Case Causelist for The Week from 22-05-2017 To 25-05-2017

PwC Alert - Tax authority clarifies uncertainties about VAT rules
October, 06th 2009

The Hungarian Tax Authority (APEH) has recently published an information bulletin on its website on the correct application of the VAT Act that came into effect in 2008. The material has clarified a number of uncertainties in connection with the valid interpretation of these rules.

Tax Authority APEH recently published an information bulletin on its website on the correct application of Section 71 (2) and (3) of the VAT Act that came into effect in 2008. The material has clarified a number of uncertainties in connection with the valid interpretation of these rules. In its latest Tax & Legal Alert, PricewaterhouseCoopers provided a summary of this information bulletin and highlighted a few additional issues that still remain ambiguous.

The bulletin emphasizes that the discount may only be provided at the same time as, or after the principal transaction; it is not possible to provide any discount before the principal transaction.

1. The application of Section 71 (3) of the VAT Act in connection with discounts provided in kind

Under this rule, the taxpayer may decide not to reduce the VAT base. Therefore, the tax base will not decrease; instead, the taxpayer or another person may supply additional goods or services to the extent of the discount. This rule was meant to provide the statutory basis of such loyalty programmes under which coupons or points given at the time of the purchase may be used later at the taxpayer or another retailer basically as a cash equivalent. In such cases, the seller is required to pay VAT on the coupons or points used. As a result, the goods transferred later by the original retailer or by another taxpayer do not qualify as an actual discount.

2. The application of Section 71 (2) of the VAT Act in connection with discounts provided in kind

If the taxpayer provides a retroactive discount in kind in connection with- and with regard to its own transaction, the original tax base may be reduced if the transaction is appropriately documented in accordance with Section 71 (2) of the VAT Act.

If the discount under Section 71 (2) of the VAT Act is provided at the same time as the transaction making the customer eligible for the discount is completed, it is possible to issue such an invoice that only includes the actual payable amount as a tax base and does not show the amount of the discount.

If the taxpayer provides a retroactive discount in kind, under Section 77 (3) of the VAT Act, the invoice of the original transaction (with regard to which the discount in kind is provided) must be modified appropriately by issuing a document that qualifies as an invoice.

This, however, does not mean that the invoice is actually adjusted or corrected, as only the quantities and the unit prices change, the tax base will remain the same.

It is, however, still uncertain what the correct interpretation of the abovementioned rules of the VAT Act is in connection with a so-called quantity discount. The essence of a quantity discount is that when the customers reach a set number of purchases, they will gain the right to a specific and invoiced price discount for the purchases of the period the discount applies to.

It is unclear whether it is an appropriate solution to issue a document that qualifies as an invoice and includes a reference to the last invoice only and that modifies the last invoice and the tax base to ensure that the agreed amount of discount is equal to the amount specified in the agreement on the discount, or if all invoices the discount applies to need to be referred to in the document that qualifies as an invoice.

PwC suggests checking the discounts in kind clients have provided by reducing the VAT retroactively over the past one and a half years, as in future tax audits the Tax Authority will likely focus on checking whether the strict accounting and documenting rules have been complied with.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
System Testing Solution Manual Software Testing Solutions Automation Software Testing Solutions System Workflow Testing System Manual Testing

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions