13 May 2009
in rule 53 certain reduction to be made for setoff. There is no specific rule for reduction. You have to deduct 3 %. so your journal entry will be
if you have made purchase of Rs. 100 and vat is Rs. 12.5 which are eligible for reduction of 3% then your entry will be
1. purchase a/c 103 (100+ reduction of 3) vat setoff 9.50 to creditor 112.5
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