Under value sales

This query is : Resolved

Raj kumar Raghav (Querist)
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29 May 2012 Dear Sir,

I am working with a distributer of Su-kam (deals in Invertor & batteries). Here situation is That the Su-kam company Bills us at a rate which is higher then our lending and later on it pass on Credit notes.
For Example, it bills us a battery of Rs. 6500+(vat 12.5%). It issues us 4% Credit note later on. and credit not of scheme too if any. the problem is that we have to sell them after cutting 4% and scheme amount. for example at 6100 + vat 12.5%. Is it the correct way of billing? kindly suggest the alternative.

Thanks & Regards
Rajkumar Raghav

Nirpendra Singh

Nirpendra Singh (Expert)
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29 May 2012 No its a wrong way of billing because if the company is issuing credit note to distributers than your input credit amount will be reduced proportionate on the whole amount
e.g.
initial billing amount Rs 6500+12.5vat%
& credit note issued for 4% of bill amount than it should be for Rs (6500+12.5%vat)*4%
now you will reverse your VAT inpur credit amount and can avail rest amount as VAT input Credit.