HELLO FRIENDS, CAN ANYBODY TELL ME IF A PARTY CUTS THE SALES BILL INCLUDING VAT.
THEN IN ACCOUNTING WHETHER I HAVE TO ENTER EACH AND EVERY BILL BY CORRECTLY AMT. OF SALES, VAT OUTPUT AND SURCHARGE.
OR SIMPLY I PASS THE GROSS SALES ENTRY AND AT THE END OF THE QUARTER I REVERSE THE SALES AND SHOWN THE VAT OUTPUT AS A LIABILITY IN A SINGLE ENTRY.
PLS. HELP ME. WHICH TREATMENT IS BEST AND ACCEPTABLE TO THE DEPARTMENT.
THANKS IN ADVANCE.
I need you to explain in little more easier way to answer.
It must be Local Sales and Vat will be charged as per applcable rates.. entry should be
Party(Debtor) a/c. XXX
To Sales a/c. XX
To Vat Output X
Later if returned then you will give effect of reversal but through Sales Return account(by debiting) or Credit Note, as per the system followed in an organisation..
I AM SAYING, CAN I PASS THE ENTRY LIKE THIS
DEBTORS A/C-DR
TO SALES A/C (INCLUDING VAT AMOUNT)
AND AFTER THE END OF QUARTER CAN I PASS THE CONSOLIDATED ENTRY
SALES A/C- DR
TO VAT OUTPUT A/C
IS THIS TREATMENT CORRECT?
but this would be not accepted by Sales Tax Department due to various rules and moreover many products are having different rates so you should not follow this method.
Accounting should be done in Standard way so that an entry can explain its nature and scope on just a look.
I am agree with vimal. though nothing is wrong in the entry you suggested but it itself can cause you inconvenience in maitaining party wise record of VAT. all problems will be sort out by crediting the VAT a/c at the time of booking of sales.
bill wise break up is needed to file the returns, otherwise the party would face prob in return filing of vat.
CAclubindia
