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Vat on goods thrown away

Sanchit Gupta (Chartered Accountant) (30 Points)

26 March 2012

Hey.... We run a small provision store.... and like any other store.... we have a lot of old stock dumped in the godown..!!
Now I wan to throw it all away.... So the entry in my books would be:
Debit - P&L
Credit - Respective Stock

But I'm confused regarding the VAT implication on the same....
So my Question is, Do we need to deposit VAT on the goods thrown away..??

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7 Replies

Harshal Fifadra (Chartered Accountant) (1489 Points)
Replied 26 March 2012

VAT can be Deposited only when it is collected ..

In the Instant case the obsolete stock is not sold and hence the VAT is not colllected and so cannot be deposited .

Your treatment of Debiting the Profit and Loss A/c for goods thrown away is Correct .

Ok..

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Sanchit Gupta (Chartered Accountant) (30 Points)
Replied 10 April 2012

But VAT is required to be deposited in case of self consumption.... Would'nt the case be same here..??

Originally posted by : Harshal
	VAT can be Deposited only when it is collected .. In the Instant case the obsolete stock is not sold and hence the VAT is not colllected and so cannot be deposited . Your treatment of Debiting the Profit and Loss A/c for goods thrown away is Correct . Ok..

Harshal Fifadra (Chartered Accountant) (1489 Points)
Replied 10 April 2012

Dear Sanchit , you have not consumed the goods .

You have thrown the goods away

So , no VAT to be colected and deposited .

Ok ...

Sunil Kumar G (AGM Taxation) (373 Points)
Replied 10 April 2012

VAT is applicable only there is any value addition at the time of sale. If you are not making any sale , VAT is not applicable.

sai tax solutions chennai (proprietor) (112 Points)
Replied 10 April 2012

hello everybody, i would like to add main point that no vat liability is there as there is no sales, but he has to revert the input tax credit taken for the goods which is not sold but disposed by way other than sales

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CA Rakesh Goenka (CA & CS) (872 Points)
Replied 10 April 2012

I strongly agree with Mr. Harshal

Sunil Kumar G (AGM Taxation) (373 Points)
Replied 11 April 2012

Input Tax reversal is applicable only for exempted goods and goods send out side the state by way of stock transfer. Here nothing barring you to take the credit. No need for reversal of duty like Central Excise Law.