I have come across a serious problem of recording a transaction in the books of accounts.
A tender was made in absence of increase of VAT for a sale to State Government Unit. In fact VAT %age has increased from 4% to 5% in WB. Now Govt has denied making the excess payment of VAT.
May I seek your proficiency / expertise on how to record without directly mentioning Loss in our books of accounts. Looking forward to hear from you in an affirmative note.
10 April 2014
Normally the Taxes (VAT) are quoted extras. But if the customer is not ready to pay for the increase in the Taxes, the supplier has to bear the cost.
The Account treatment Example Base Amount Rs. 100 Taxes 5% Vat 5 Total 105
But the customer will pay only Rs.104.
Than you can apply the reverse calculation Base Amount Rs. 99.05 Taxes 5% Vat 4.95 Total 104.
Here you will not be violation the TAX Law and will be accounting for the sales which your customer is ready to pay.
Rs.1 is your loss but it will not be shown separately.
Thank you for your time and attention to my request. However like to bring to your kind attention that as stated a TENDER was made and there is no way to change the base price i.e., Rs. 100 as you have considered. In context to above is there any chance to adjust the difference by any discount. Please help...
11 April 2014
Thank you very much for the support extended... May I request you to update me whether discount can be allowed as suggested by you for a tendered sale where no discount matter was included? Still if discount is shown on the face of the invoice whether any question can be raised by CAG. If raised how to avoid the same. Look forward to hear from you very soon.
You can show the discount on the face of invoice so that the VAT will be applicable on the met amount. And you will not be exceeding the the total amount of tender hence there will not be any query from CAG.
Even if they ask " you have not done any thing wrong, you have allowed them discount" for the fact that they were not ready to pay the Actual TAX. You can not violate the Tax Law for the want of your customer.
CAclubindia
