03 October 2013
HOW WILL WE PASS ENTRY FOR INNPUT VAT CREDIT TAKEN AGAINST OUTPUT TAX. WHAT Will be entry & narration. Will we have to open Input vat A/c And input tax credit A/c separately & pass entry at the end of each month. how output vat will be set off againt input tax . what will be the entry & narration. IF output tax is excess how entry will be passed .what will be the narration.If input tax is excess what will be the entrt & narration. Please Advice me in details along with entries & narrations
04 October 2013
i will explain it with an Example:
on purchase of material of Rs. 50000 you pay Input Vat Tax of Rs. 2500
Entry: Purchase A/c Dr. 50000 Input Vat A/c Dr. 2500 To Creditor A/c Cr. 52500
On sales of Rs 80000 you have to pay 4000
Entry: Debtors A/c: Dr. 84000 To Sales A/c Cr. 80000 To Output Vat Tax A/c Cr. 4000
At the end of year pass an entry to close vat account and to make provision for payment as follow:
Entry: Output VAT Tax A/c. Dr. 4000 To Input Vat Tax A/c Cr. 2500 To VAT Payable A/c Cr. 1500 [being provision for VAT liability for the period ___ to ___ is made]
on payment of VAT pass the following entry
Entry: VAT Payable A/c Dr. 1500 To Cash/Bank A/c Cr. 1500
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