Can it be business expense
This query is : Resolved
10 March 2015
can anyone,vat paid on sales which in turn is not collected from customers can be allowed deduction as business expenses for such assessment year from income tax perspective under which section???
10 March 2015
yes, you can claim vat as a business expenditure
11 March 2015
it is allowed under sec 37(1)
27 March 2015
At the time of Sale, following entry would have been passed:
Party A/c Dr. 1050
To Sales 1000
To VAT payable 50
At the time of payment of VAT, following entry would have been passed:
VAT Payable A/c Dr. 50
To Bank 50
At the time of receipt of money from customer:
Bank A/c Dr. 1000
To Party A/c 1000.
Thus, we should understand that the amount which has not been collected pertains to the uncollected debtors. The liability for VAT is yours to pay and not that of the customer.
You may write your debtors off and the same will be allowed as an general expenditure (as rightly said by Tushar Ji). However, while going through the assessment, instances have occurred that the assessing officer tends to disallow the bad debts written off.
Party A/c Dr. 1050
To Sales 1000
To VAT payable 50
At the time of payment of VAT, following entry would have been passed:
VAT Payable A/c Dr. 50
To Bank 50
At the time of receipt of money from customer:
Bank A/c Dr. 1000
To Party A/c 1000.
Thus, we should understand that the amount which has not been collected pertains to the uncollected debtors. The liability for VAT is yours to pay and not that of the customer.
You may write your debtors off and the same will be allowed as an general expenditure (as rightly said by Tushar Ji). However, while going through the assessment, instances have occurred that the assessing officer tends to disallow the bad debts written off.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Applicability
- Is Aadhar PAN linking required for opening bank account?
- Where to show the RCM on Rent paid to unregistered landlord
- CPC Processing IT Return for AY 2023-24 without recognizing the Taxation Option under New Regime
- Application of 115BAC
- RCM - commercial rent paid to URP under GST
- Offsetting interest income against derivative trading losses
- TDS NUMBER SURRENDER
- GSTR-3B - Do I file nil when there is no sale but I've bought raw materials
- Legal heir raised refund , but refund issued to the closed account of deceased.
- Whether still royalty
- 20% OF DEMAND PAYMENT IN APPEAL
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding Resignation by Auditor from Pvt. Ltd.
Trending Online Classes
-
Excel Mastery Program
CA Rishabh Pugalia
CAclubindia
