Mfg.of Shoes.

[Ramesh Parmar]

We Mfg. Shoes, Vat rate of Mtl of shoes is @ 5% but the complete shoes rate is 12.5%. Our cost is including Labour. The difference of 7.5% can be adjusted or not.

AI Summary

VAT on Shoe Materials vs. Finished Products: No Adjustment for 7.5% Rate Difference, Full Credit on Materials Allowed. A shoe manufacturer inquired about VAT rates, noting that the VAT on shoe materials is 5%, while the rate on finished shoes is 12.5%. They questioned whether the 7.5% difference could be adjusted. The response clarified that the manufacturer can claim the full 5% VAT credit on materials and must pay the remaining VAT on the finished product, implying no adjustment of the 7.5% difference is necessary.