The company is an exporter and being an exporter Service tax, VAT etc are refundable to it. The company shows Service Tax / VAT refundable under current assets. The company has not received major portion of its refunds and huge amount has accumulated under the head service Tax / VAT refundable.
Now the company wants to change the accounting ST / VAT. It will debit the expenses including service tax to its PL A/c. On receipt of refund the amount will be credited to income.
Is it an allowable accounting policy?
Can a company debit to PL A/c its refundable Service Tax / VAT to PL A/c and credit to PL A/c on receipt of refund.
Pls. reply.
CAclubindia
