25 March 2010
Dear Friends, our company is a jewellery mfg company and we purchase raw materials from parties to whom we are supposed to make dollar payment. Now the invoice of the company from whom we purchase raw material discloses value in $ and its exch rate in rupee, the same dollar is converted into rupees and vat is charged @ 1% on the rupee value. While booking we book the invoice in our books as per the exch rate prevailing on the date of inward of the material in the factory, VAT payment is made in cheque. Is this ok or we should book the same amount given in the invoice, however if we do so we violate the rules & regulations of foreign transactions and if we go according to the former it might attract problems in VAT return. Please suggest some remedy for this
26 March 2010
VAT will not be there in the purchse invoice.You must be collecting vat on the customers bills/invoices which u are remitting by cheque.Therefore adding VAT in purchases is incorrect.Otherwise what is being followed by u is normal business practice followed in India.
CAclubindia
