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Invoice date?

Proud to be Indian (Articled) (65 Points)

11 February 2016

One of our client is recording purchase invoices on their receiving date(Date of physical copy received) and ignores Invoice date(printed on invoice) , Pls tell me is it a correct practice followed by them??? Is it applicable under the various act like VAT. Service tax, Income tax & Excise???

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10 Replies

Kunal Pansari (Accountant) (1037 Points)
Replied 11 February 2016

Purchase date can either be as per date of the invoice or the date on which the material is received but not the date on which the hard copy of the invoice is received.

Proud to be Indian (Articled) (65 Points)
Replied 11 February 2016

Thank you Kunal Sir for replying, but pleses clarify which date should be consider, Invoice date or Material received date or whichever is earlier of any said dates? also provide any section related to this if possible>>

CMA Poornima Madhava (CMA) (13097 Points)
Replied 11 February 2016

Invoice date cannot be considered as transaction date for all transactions. For example, if there is an interstate purchase, the date of invoice will be much before the date of receipt of materials. So in such situations, if date of invoice is considered as date of transaction, it does not seem correct.

Hence as already said by Kunal, date of invoice or date of receipt of material whichever is later can be considered in this case.

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Kunal Pansari (Accountant) (1037 Points)
Replied 11 February 2016

But there could be a matter of difference in both the cases.

Like if the date of invoice is taken into consideration, there could be difference in stock tally.For eg. you receive a invoice dated 24.05.15 and you consider this date as your purchase, your stock will increase in your books of accounts but you may receive the materials some days later. Hence, your physical stock may be different from your book stock.

On the other hand if you consider receipt of material as your purchase date, you may have a mismatch with your seller's statment. For eg. a seller has billed you with the invoice date 31.03.16 and consider the same date for his sale entry, but you receive the materials on 03.04.16 and you consider the later date for your purchase entry. As in this case both quarters and financial years have changed, you may encounter the difference with your supplier in both VAT Return and Audit Reports.

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Proud to be Indian (Articled) (65 Points)
Replied 11 February 2016

In such situation, taking Invoice date will be right decision, isn't it?

Kunal Pansari (Accountant) (1037 Points)
Replied 11 February 2016

Yes, that would be the better option.

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Proud to be Indian (Articled) (65 Points)
Replied 11 February 2016

Conclusion-: Take invoice date printed on invoice.

Hitesh Khanna (Accounting & Finance Taxation Company Law Audit ) (839 Points)
Replied 11 February 2016

I would like to cite a practical case Generally say in the above situation, the buyer posts the cheque to the seller by courier & as obvious the seller will received the cheque after 2-3 days. Here the buyer will record in this book the date on which cheque is drawn is I.e the cheque date and the seller will record it on the date of receipt of chq by post. Referring to the conclusion in the above case, how far is it correct to ask the seller to record in his book, the date of cheque as the date of receipt of cheque. I believe that the practice of client of recording purchase on receipt of invoice is correct, however the client shoulmention in the narration " being goods received against , invoice no..xx dated xx/xx/xxxx

Kunal Pansari (Accountant) (1037 Points)
Replied 11 February 2016

Dear Hitesh

Here, both the case of purchase invoice and your's case of cheque is totally different.

Recording of purchase transactions affects both your VAT Returns as well as your Audit Report. But receipt or payment of cheques affects only your audit report or in some case it may not also.

Let me explain it with an example. Mr A issues a cheque of Rs. 20000 to Mr B against the payment of a invoice of Rs. 50000 on 30.06.16 and records the same on his books of accounts. Mr B receives the cheque on 02.07.16 and records the same on his books account. But though both the parties has recorded the enteries on two different dates, their closing against each other as on 31.03.17 would be the same.

But in case of purhase or sale, the scene will be totally different.