ravi (senior accountant) (507 Points)
03 May 2011Pls clarify my query. Should we debit net VAT (input credit - output liab) to the p&l as a separate exp or should not be debited pls clarify me whether we are acting as agent between customer and govt to pay the net VAT. pls also clarify me where should I debit every month's sales tax liabilty also clarify me whether it comes as a item of exp in p&l or not?
subramanya
(Professional)
(907 Points)
Replied 03 May 2011
Hi,
In General,
Input vat needs to be considered as "Current Assets"
Output vat needs to be considered as "Current liabilities"
1) Assume a scenario, where my Ouput vat is morethan Input vat which is actually VAT payable (under Current liabilities)
Then
Dr Output vat
Cr Input VAT
Cr VAT payable
2) Assume another scenario, where my Input vat is morethan Ouput vat collected which is actually VAT Refundable (current Asset)
then
Dr Ouput vat
Dr VAT Refundable
Cr Input vat
Also i think its not an P & L item, its Balance Sheet Item.
Please correct me if I am wrong.
With regards,
Subramanya R
Live class on PF & ESI Enrollment & Returns Filing(with recording)
CAclubindia
