Do I pay VAT on NBT?

Question

I.e. is the taxes added or multipled?

 

Example Added

Rs. 100

NBT 2% is Rs. 2

VAT 15% is Rs. 15

Total Rs. 117

 

Example Multiplied

Rs. 100

NBT 2% is Rs. 2

New total Rs. 102

VAT 15% is 15.3

Total Rs. 117.3

Comments

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Answer 1

Yes you need to pay VAT on NBT. NBT is not something that you are bound to collect from your customer (unlike VAT).

You need to pay VAT on everything you charge from customer as a general rule. You may collect NBT from customer which will be decided by the bargaining power of you & your customer. However if you just add 2% on the price, it will not get you the full NBT you are liable to pay. That means you will have to pay 2% on 102. If you want to recover full NBT (with the cascading effect) you need to charge 2/98 from the customer.

Answer 2

NBT collected from customers is considered as a part of revenue. Therefore, you have to pay VAT on NBT also.