accounting enteries for vat

This query is : Resolved

purnima (Querist)
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07 July 2010 Sir,
ours is ahospital. and has a pharmacy connected to it. every month we pay Vat on the following basis: Vat on Sales minus Vat on purchases , say it is XXX. I pass an entry as follows: Vat a/c Dr. XXX
To bank a/c XXX

For purchases the entry: purchases a/c Dr.
To bank (amt including VAT)
and for sales it is Bank a/c Dr.
to Sales A/c (amt including vat) is this right? if wrong please give the correct entries. i hv read somewhere that vat input a/c, vat output a/c has to be opened. how is this done. or is it ok with what i am doing.

Akhil Agrawal

Akhil Agrawal (Expert)
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07 July 2010 no u r doing wrong

open a vat input a/c- in Current Assets(Duties & Taxes)

at purchase

Purchase Dr
Vat inputDr
Cash/Bank/Creditor Cr

Open a Vat Output account - in current liab (Duties & Taxes)

At sales

Cash/Bank/Debtor Dr
Sales Cr
Vat Output Cr

At the end of Tax Payment period Pass this entry

Vat output Dr.(with amount o/s in this a/c)
Vat Payable Cr

&

Vat Payable Dr(with amount o/s in this a/c)
Vat Input Cr

& the net amount in Vat Payable wil be paid

Vat Payable Dr
Bank/Cash Cr

Message likes : 1 times

CA Sanat Pyne

CA Sanat Pyne (Expert)
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07 July 2010 AGREE WITH AKHIL JI

BUT AT THE END OF THE MONTH YOU CAN PASS THE ENTRY BELOW:
VAT OUTPUT ----------DR
TO, VAT INPUT
TO, BANK(BALANCE)

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