Input vat

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

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

CA Harish Shyam Choudhary

CA Harish Shyam Choudhary (Expert)
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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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