17 August 2009
The Company has paid VAT on purchases. But the goods sold by them after production is exempted from VAT. The query is: Q1) Should the VAT paid on purchases be shown as VAT Receivable in the Current Assets or added to Purchases?
Note:The company is filing the VAT Return and claiming the refund but not in receipt of any refund upto now even for the VAT paid since F.Y.2005-2006.
19 August 2009
With both zero-rated sales and exempt sales you don't charge VAT. However, for zero-rated sales you are eligible to claim a tax credit for the input tax paid on your purchases; (Example: If a dealer is making exports, he is eligible to claim Input tax on purchases made within the state, subject to conditions)
Whereas for exempt sales you are not eligible to claim a tax credit for the input tax paid on your purchases relating to such exempt sales.
If your sales are exempted sales, you can include the VAT paid on purchases as purchase cost.
CAclubindia
