Reimbursement

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Querist : Anonymous

Querist : Anonymous (Querist)

02 June 2015 One of my client is a dealer of FMCG product. Sometimes dealer has to sell product at below selling price due to various schemes offered by company to end customer. Company reimburses dealer, the difference in sales price and actual price at which dealer sells product to customer by issuing credit note.

How should I account this transaction ?
Should I treat Reimbursement amount as my income and credit it to P&L and debit it to Company's A/c

Company A/c Dr
To reimbursement Account

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 June 2015 If you take it as discount on your purchase VAT problem will not arise.

Querist : Anonymous

Querist : Anonymous (Querist)

02 June 2015 Please explain in detail

Querist : Anonymous

Querist : Anonymous (Querist)

02 June 2015 Company A/c Dr
To Purchases A/c

Querist : Anonymous

Querist : Anonymous (Querist)

02 June 2015 For Example I am dealing in a product who's MRP is Rs. 100. The company asks me to sell those products at below MRP say for example Rs 90. The difference of Rs. 10 will be reimbursed by company by issuing credit note of Rs. 10 which I can use it in next purchases.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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03 June 2015 If you treat it as income sales tax authorities will consider it for VAT purpose. If you reduce it from purchase price by passing the above entry crediting purchase VAT problem will not be there. Moreover it is the right practice as discount is offered by your dealer.

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