Input VAT vs Output VAT: What’s the Difference?
Quick Answer
Input VAT vs Output VAT: What’s the Difference?
Output VAT is the 15% you charge customers when you sell. Input VAT is the 15% you pay suppliers on business purchases. On each VAT201 you pay SARS the difference: output tax minus input tax. You can only claim input VAT with a valid tax invoice.
The two sides of VAT in one table
| Input VAT | Output VAT | |
|---|---|---|
| What it is | VAT you PAY on purchases | VAT you CHARGE on sales |
| Example | 15% on stock, rent, equipment | 15% added to your invoice total |
| Where it appears | VAT201 purchases block | VAT201 supplies block |
| Effect | Reduces what you owe SARS | Increases what you owe SARS |
| Proof needed | Valid tax invoice in YOUR name | Your tax invoice to the customer |
Definitions: input tax and output tax.
A worked example
During a two-month period:
- You invoice R230,000 + 15% VAT = R34,500 output tax
- You buy stock and pay expenses of R115,000 + 15% VAT = R17,250 input tax
- VAT201 payment to SARS: R34,500 – R17,250 = R17,250
If the numbers were reversed (more purchases than sales), SARS owes you a refund of R17,250.
When you cannot claim input VAT
- You do not hold a valid tax invoice – a quote, statement or till slip is not enough
- The purchase is for personal use or entertainment (with limited exceptions)
- You bought a passenger car (input VAT on cars is generally blocked)
- The supplier was not a registered vendor at the time
Deep dive on the paperwork: Professional Invoices in South Africa.
Common mistakes to avoid
- Treating a supplier quote as proof of input VAT – only a tax invoice works
- Claiming VAT on expenses with no business connection
- Forgetting that import VAT at customs can also be claimed with the right documents
- Not checking that a new supplier is actually VAT registered
A South African example
Priya runs a bakery. In one VAT period she sells R400,000 of cakes (R60,000 output VAT) and buys flour, sugar and packaging of R180,000 (R27,000 input VAT). Her VAT201 payment is R33,000. The R27,000 she reclaimed is real cash she would have lost without proper invoices.
Related questions
- What Is VAT201 and How Do You Submit It?
- How to Register for VAT in South Africa
- Zero-Rated vs Exempt VAT: What’s the Difference?
- Tax Invoice (glossary)
Always verify this information with official South African government sources. Rules, fees and thresholds change. Check SARS before you act.
Frequently Asked Questions
Can input VAT be more than output VAT?
Yes – common for growing businesses with big purchases. You claim the excess back as a refund on the VAT201.
Is a till slip enough to claim input VAT?
No. You need a full tax invoice showing the supplier’s VAT number, your name, and the VAT amount.
How long must I keep tax invoices?
Five years from the date of the return they support.
