Classification of VAT

The three different types of VAT rates are:

1. Standard Rate

Most of the goods and services have been subject to a 5% standard tax. These include things like electronics, cars, petrol, jewellery, food, drink, clothing, entertainment services, cosmetics, hotels, restaurants, and commercial leasing.

2. Zero Rate

Certain types of products and services are subject to VAT at zero rates, which means that even though they are taxed, the rate is zero. The provision of specific transport means, the supply or import of investment precious metals (of 99% purity or more), the provision of residential buildings, the provision of buildings used for charitable purposes, the provision of specific educational services, and the provision of specific healthcare services all fall under this category.

3. Exempt

For items and services falling under this category, exempt VAT is not applicable. It includes local passenger transit, certain residential structures, bare land, and financial services.

Benefits of VAT Accounting

1. Easy Tax Returns

A corporation organizes tax-related papers which would simplify the process of preparing the company’s tax return.

2. Offers Adaptability

The management of the firm may review the VAT accounting report and decide the growth strategies of a company under the established budget.

3. Tracing records of VAT

Accounting for VAT enables the business and the relevant authorities to determine whether all required tax-related papers have been submitted.

4. Reduces the Probability of a Tax Audit

The business will have information about all of its transactions by using VAT accounting. The likelihood that the relevant authorities will undertake a tax audit will be diminished.

5. Serves as evidence

The management can provide accurate information about the tax-related transactions carried out by the company if the relevant authority decides to conduct a tax audit.

6. Lessens the likelihood of penalties

By ensuring that the business complies with all laws VAT accounting lowers the likelihood of legal cases.

7. Spreads knowledge of VAT-related programmes

The government periodically introduces newly Value Added Tax-related initiatives. Accounting for VAT would raise awareness about legal changes.

 GSPU VAT Compliance Services

GSPU offers consulting services to accounting and tax services and provides compliance services in terms of VAT accounting as follows:

• VAT Registration process
• Invoicing and VAT treatment
• Maintaining the book of records
• Investigating the issue of record inspection.
• Assistance with proper and timely vat returns filings.