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Computation of VAT and Profit
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https://help.tallysolutions.com/docs/te9rel49/Value_Added_Tax/computation_of_vat_and_profit.htm

Computation of VAT

 

The above diagram depicts computation of (10%) VAT at each stage of business. Hence, it is not the manufacturers and retailers but only the consumer who has paid 10% VAT to the government. The profits for manufacturers and retailers thus remain unaffected.