Construction Activity, Income Tax & VAT

This query is : Resolved

shehzad (Querist)
Follow

03 June 2009 Dear Experts,
Our co. is taking construction contracts.
My problem is that as per AS 7, we have to book income as per the work done. So, we are doing it accordingly & showing sales accordingly.
But as per VAT, it is not shown as sales until a sales invoice is raised. We have not raised sales invoice as still construction activity is going on. Now as per income tax closing stock is less but as per VAT closing stock is very high. So, what can be done in this matter.
Is there any other treatment?

Please reply ASAP.
Thanks

CA.BHARAT BHUSHAN

CA.BHARAT BHUSHAN (Expert)
Follow

03 June 2009 you may file reconciliation statement with the VAT authorities but books should be prepared as per accounting standards.

shehzad

shehzad (Querist)
Follow

03 June 2009 So, sir you mean to say that when VAT audit will be conducted, our VAT auditor will do the audit as per the stock calculated as per income tax act.
Can u please elaborate your answer, so that i can get clear understanding. I am not able to understand clearly.
Thanks

Upgrade to CAclubindia Pro. Subscribe Now!

CA.BHARAT BHUSHAN

CA.BHARAT BHUSHAN (Expert)
Follow

03 June 2009 Ya, stock value cannot be changed.If you have the physical valuation of material, then the stock value will remain the same.In first query, there is difference in sales figures due to difference in accounting treatment.so, if will make the reconciliation of sales figure, the stock will automatically get tallied.