VAT Overview

Article
10/18/2021

In India, a manufacturer or registered trader selling taxable goods is liable for paying VAT to the tax authorities. For interstate purchase or sales transaction, VAT is called Central Sales Tax (CST). For intrastate purchase or sales transaction, VAT is called as Local Sales Tax (LST). If the manufacturer or the trader has paid input tax, then it can be set off against the CST or VAT liability.

Using VAT

In Microsoft Dynamics NAV, Indian VAT requirements are covered with a standard solution for all states and union territories for VAT acts. You can use VAT to calculate taxes for purchase or sales transactions and to generate reports.

Setting Up VAT

To use VAT, you must set up tax details, jurisdictions, tax areas, tax group codes, state codes, tax area locations, and so on. This setup helps to calculate input VAT credits, output VAT, input VAT on capital goods, VAT adjustments, and VAT settlement processes. For more information, see How to: Set Up VAT.

Transactions

You can calculate input VAT or CST on purchase and sales documents for standard items, capital goods, fixed assets, and general ledgers (leases). You must provide sales tax setup information to generate the tax entry or detail tax entry using the following windows:

Purchase Order – To compute input VAT, LST, or CST. To compute input VAT purchase tax.
Purchase Order – To compute input deferred VAT.
Sales Order – To compute output VAT, LST, or CST.
Sales return orders or purchase return orders – To generate the tax entry details.

For more information, see How to: Post VAT Transactions.

Reports

You can generate VAT reports for submission to sales tax authorities for a specific state. You can also generate returns for VAT settlements, like the Delhi return or the Maharashtra return. For more information, see How to: Generate VAT Reports.

VAT Overview

Using VAT

Setting Up VAT

Transactions

Reports

See Also

Tasks

Concepts

Additional resources