Whether VAT is a expenses?. Under which account head the same has to be shown. Please reply. Thanks.
3 Replies
CMA Poornima Madhava
(CMA)
(13112 Points)
Replied 19 May 2015
Your question is incomplete. However, I will try to give u basic info. If VAT is paid on raw materials/components etc in connection with manufacture/trading, such vat can be availed as input credit and same is not treated as expense. On the other hand, if vat is paid on expenses (other than manufacture/trading) then such vat has to be treated as expense. Hope it is clear.
Bhavesh
(Accounts)
(899 Points)
Replied 20 May 2015
Thanks Poornima. if we are purchasing for Printing & stationery and other such office expenses how the same has to be shown in the balance sheet under what head? please reply.
CMA Poornima Madhava
(CMA)
(13112 Points)
Replied 20 May 2015
In this case you debit it to the particular expense only, eg. Vat paid on p&s to be debited to p&s only. Vat won't be shown in bs as it will be shown in p&l as expense
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