Output tax

Tax Glossary Definition

Output tax

Output Tax is the VAT a business charges its customers when it sells goods or services. This amount becomes the business’s VAT liability, which it must pay to the tax authorities. A VAT-registered business collects Output Tax on its sales and can subtract the Input Tax it paid on its purchases. Only the net amount is finally paid to the government.

Example: If a company sells goods worth ₹1,00,000 at a 10% VAT rate, its Output Tax is ₹10,000. If it has already paid ₹4,000 as Input Tax on purchases, its Net VAT Payable is ₹10,000 – ₹4,000 = ₹6,000, which is the amount it must remit to the tax authorities.

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