How you may fall into a debt trap Chandani further explains, let's say you made a purchase of Rs 10, on your credit card. You receive your card statement or bill which shows your minimum dues as Rs , that is, 5 percent of the total dues. If you pay this amount, you'll not be charged late payment fees. However, in most cases, the interest will be levied after credit free period is over for the total amount due of Rs 10, till the minimum due amount is paid and when it is paid, the remaining balance of Rs 9, will continue to attract a monthly interest rate of around percent.
So be sure to check the terms and conditions specifically related to the credit card you are using," he said. Interest on balance amount Rs 9, will be levied for the next 16 days till the new statement is generated. Interest on balance amount Rs 9, will be levied for the next 5 days till the new statement is generated.
In addition to the above, a late payment charges will also be applied as 'minimum due amount' was not paid on or before the amount due date. Point to note The interest will be levied from the date of purchase on your credit card.
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So, even if you have paid the minimum amount due and have avoided paying the late payment penalty, you will not get the benefit of interest-free credit period for the coming months, irrespective whether you have made minimum amount due payment before or after the amount due date. Disclaimer: The actual interest calculation will vary based on your purchase, revolve behaviour and the interest rate applicable on your credit card. Not making enough money in stocks? Click here for real-life stories of successful investors.
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If you pay by cheque: the date of payment is the date you send the cheque, or the date on the cheque, whichever is later. If your cheque is not honoured, you cannot reclaim the VAT. Paragraphs 5. If you incur input tax on goods and services that you use or intend to use in the making of exempt supplies, you may not be able to claim all your input tax.
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This is known as partial exemption. Under the normal method of accounting for VAT, businesses who are partly exempt will usually make a calculation to establish the correct amount of input tax claimable, based on purchases and sales made during a tax period. Partly exempt businesses who use the scheme must base such a calculation on payments made and received in a tax period. When you fill in your VAT Return the amounts of VAT due and deductible are based on payments received and made, not on invoices issued. Remember, if you make supplies to other EC member states the amount you put in box 8 of the VAT Return should be the total value of all supplies of goods and services made, exclusive of VAT, and not the total of payments received.
If you receive or pay a deposit which serves as an advance payment, you must account for it in accordance with the rules in paragraphs 4. VAT does not apply to deposits taken as a security to make sure the safe return of goods, whether you refund it upon return of the goods or retain it to compensate you for loss or damage.
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If an agent collects payments on your behalf, you must account for VAT on the supply in the VAT period in which your agent collects payment from your customer. The value on which VAT is due, is the amount of the taxable debt that the agent collects from your customer, not the amount of credit given to you by the agent see paragraph 5. If you have assigned to a factor a debt in respect of a taxable supply you have made while using the Cash Accounting Scheme, you must account for output tax on the supply in the VAT period in which your factor collects payment from your customer.
The value, on which VAT is due, is the amount that the factor collects from your customer in relation to taxable supplies, not any lesser amount paid to you by the factor see paragraph 5. If the factor is unable to collect all or part of the debt, then you must account for that amount under the normal rules, in line with paragraph 4. If the factor is unable to collect all or part of the debt on your behalf, then you must account for output tax on the uncollected element of the debt, in the period in which any advance made against that debt is written off by the factor.
If, however, the factor re-assigns all or part of the debt back to you under a recourse clause, then you may be able to claim bad debt relief, subject to paragraph 6. If you sell a debt for a taxable supply you made while using the Cash Accounting Scheme, you must account for VAT on the supply in the VAT period in which the debt is sold. You must account for the output tax on the full value of the supply, to which the debt relates, not on any lesser amount which you receive when you sell the debt.
You cannot use the Cash Accounting Scheme for goods you import, acquire from a business registered in another EC member state or remove from a customs warehouse or free zone. You can, however, use the scheme to account for VAT on the onward supply of such goods.
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If you use the scheme and export goods or despatch them to another EC member state but do not receive the evidence of export or supply within the time limits allowed, you must account for the VAT that becomes due. This means that you account for VAT on any payments already received. If you receive further payments for such goods you must account for VAT on these payments when you receive them. If you later obtain evidence of export or supply you can then zero rate the supply and adjust your VAT account for the tax period in which you obtained the evidence.
Further information regarding acquisitions from, and despatches to, other EC member states can be found in The single market VAT Notice This section has force of law and explains what to do if you receive part payment for an invoice in circumstances where you still expect to receive the rest of the payment.
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Paragraph 5. You must allocate the payment to the invoices in the order in which you issue or receive them if you make or receive payments which:. Where you make or receive partial payment of an invoice and VAT is not identified separately you must treat the payment as VAT inclusive.
Where you make or receive payments which relate to an invoice for supplies at different rates of tax you must apportion the amount paid or received between the different rates and treat the amounts on which VAT is due at the standard or lower rate as VAT inclusive. If you receive a net payment you must account for VAT on the full value of taxable supplies made by you before such deductions.
This will usually be the value shown on your VAT invoice - remember not to include any amounts that are for supplies that do not attract VAT. You must account for VAT on the full tax value of the supply which is usually the price, excluding VAT, which a customer would have to pay for the supply if they had paid for it with money only.