03 August 2010
My client receives exemption in Sales Tax based on the salary given to the staff for first 5 years of company in existence.
We get the amt. of exemption after 5 years completion.
Now, on year end, the position is that we recd. grant of say Rs. 100 and take set off in Sales tax for Rs. 40 and balance Rs. 60 still stands in VAT Receivable A/c (Govt. Grant).
What is the proper accounting treatment at the time of getting Exemption or Grant , at the time of monthly set off with VAT Payable . How to show Grant in Financial statements?
Basically, I am confused whether it is a revenue grant or capital grant.
11 August 2010
I can share my past experience in this regard.In our company we use to get refunded 90% of sales tax paid to the government and we use to recognise this amount as income on accrual basis.In your case it is not clear whether your scheme is same.
CAclubindia
