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???
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.
CAclubindia
