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Urgent query on composite scheme
Replies (2)
1. 'Vat is not to be collected' means u can't charge vat to ur customers. Vat will be calculated on the total sales at the end of month/quarter. For eg. U made a bill to a customer for rs.10000 for service rendered. U can't charge vat to ur customer. Thus, ur billed amount would be rs.10000 only. At the end of month, suppose total sales amounts to rs.100000, you are required to pay rs.5000 (i.e. 5% of rs.100000) as vat.
2. Because there is no provision for tax credit in composition sceme, the tax paid by you is an expense. The entry would be:
Vat (expense) A/c Dr. 5000
To Bank A/c 5000
1. 'Vat is not to be collected' means u can't charge vat to ur customers. Vat will be calculated on the total sales at the end of month/quarter. For eg. U made a bill to a customer for rs.10000 for service rendered. U can't charge vat to ur customer. Thus, ur billed amount would be rs.10000 only. At the end of month, suppose total sales amounts to rs.100000, you are required to pay rs.5000 (i.e. 5% of rs.100000) as vat.
2. Because there is no provision for tax credit in composition sceme, the tax paid by you is an expense. The entry would be:
Vat (expense) A/c Dr. 5000
To Bank A/c 5000
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