General Terminologies of Taxation

Input Tax

This is the tax paid on purchases

Output Tax

This is the tax charged on sales

Input Credit

The excess amount of Input tax over output tax for the current period which is permitted to be set off against Output tax of subsequent periods is termed as Input Credit.

TIN

Tax Identification Number (TIN) is the Registration Number given by the department to the dealer at the time of  Registration. This needs to be quoted at all required places where the registration details are to be provided.

Tax Invoice

This is the Sales invoice format issued by one Registered Dealer to another. Based on this Invoice, the Input Tax Credit can be claimed by the purchasing dealer.

Retail Invoice

The Sales invoice format used for invoicing the Exempted Sales and the Sales made to Unregistered dealers is termed as Retail Invoice.

Registered Dealer

This term is used to identify a dealer who is registered either under Voluntary Registration or Compulsory Registration under the VAT Act. Such dealer can issue tax invoice and also claim the tax paid on purchases made from other registered dealers as Input tax credit.

Unregistered Dealer

Dealers who are not registered under the VAT Act are called as Unregistered Dealers (URD). Such dealers cannot issue tax invoice. They can neither Charge Tax nor Claim Input Tax Credit.

Purchase Tax

The Tax paid on goods purchased from unregistered dealers is liable to Purchase Tax. The purchase tax is treated as Output VAT payable by the dealer as it is a liability. It has to be paid while making the payment towards VAT liability. Based on the Rules and Regulations, the Input Tax Credit can be claimed on the payment made towards Purchase Tax.