VAT Payable

This query is : Resolved

CA Nitin Wadhwani (Querist)
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22 August 2008 author : SHAIKH AIJAZ ABU MIYAN
Posted On : 8/22/2008 6:34:01 PM
An assessee has paid Vat relating to F.Y.2006-07 in April-2007, but respective provision as 'Vat payable' has not been made as on 31.03.2007. Whether such payment is allowed as per the provisions of sec.43B?

Expert : Chezhiyan.K
Posted On : 8/22/2008 7:05:35 PM
Vat Payable is Not an Expense..

What ll You Disallow?

Answer - Fisrt Of All, I Would Again This Expert Not to give answers if not sure and just for sake of points.

VAT Is Certainly an expenditure and subject to sec.43B

and secondly how come u tallied the balance sheet if all liabilities are not shown. this would tantamount to window dressing of accounts.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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23 August 2008 The question is whether VAT payable which has not been provided for the year ended 31-03-2007 but paid in April 2007 is allowed u/s 43B.

Before answering that question, the queriest has to clarrify the following:

1. How do you treat VAT in your accounts while accounting purchases?
2. If you are accounting on merchantile basis how was the VAT missed to be accounted?

CA Nitin Wadhwani

CA Nitin Wadhwani (Querist)
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23 August 2008 Yes I Knw That
That's What I am Saying.
But that Expert Hurriedly gave the wrong answer.

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CHEZHIYAN

CHEZHIYAN (Expert)
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23 August 2008 CAn Some one Clarify This?

Vat Payable is an Liabilty

Vat Paid on Purchase is an Asset(i.e) you Can Claim input Credit While Paying VAT..

VAT Paid on Purchases is an Expense only if you cannot take input Credit..

Now Tell Me What ll you Disallow?

How You can Pay VAT when there is no Payable...

If Provisions for Vat Payable Not Made in the Previous Year ..

Can You Prove Where It Says Mistake of Previous Years Cannot Be Rectified....

CA Nitin Wadhwani

CA Nitin Wadhwani (Querist)
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23 August 2008 I Am Clarifiying An Answer To An "Expert"

Take This "Hypothetical" Example

Purchase Of Goods 100/- VAT-10%

J/V

1)Purchase A/c................Dr 100
VAT Paid On Purchase A/c....Dr 10
To Creditor Payable A/c 110

Sale Of Goods At 200.VAT 10%

2)Debtors A/c.....................Dr 220
To Sales A/c 200
To Vat Collected 20

Claiming Input Credit

Vat Collected A/c.........Dr 10
To Vat Paid A/c 10

Payement Of Balance Tax

Vat Collected A/c........Dr 10
To Vat Paid A/c 10

IF That Amount is "Paid" Till 31.03.2008

Entry =

Vat Paid A/c..........Dr 10
To Bank A/c 10

or

*****If Not Paid Then Entry***** =

Vat Paid A/c...... Dr 10
To Vat Payable A/c 10

Now If That(***) Is Not paid "till due date of filing of return"

the Amount is Disallowed

Vat Payable Being Having A Credit Balance Is Shown In Liabilities.