related to tax
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
05 February 2010
whether VAT is an asset or liabilities?
Answer
# 1 It is both an asset and liability.When it is collected from
purchaser it is a lisbility for seller and an asset for
purchaser.
is it true ?
Answer
# 1 It is both an asset and liability.When it is collected from
purchaser it is a lisbility for seller and an asset for
purchaser.
is it true ?
05 February 2010
A Trader's point of view:-
if seller (A) collect VAT from purchaser (B) it is his (A) liability to pay it to the government.
but at the same time when this seller (A) has purchased the same goods from another supplier for trading (C), which is sold to purchaser (B) now, he (A) would have been paid VAT on it to (C). This vat is sellers (A) Asset (this is termed as VAT Input Credit). he can adjust this VAT Credit against his VAT liability (which is collected at the time of sale to B). This is the concept of VAT.
So for a trader or Manufacturer who paid VAT on his raw material and collect vat on his sale. The vat can be both asset and liability.
if seller (A) collect VAT from purchaser (B) it is his (A) liability to pay it to the government.
but at the same time when this seller (A) has purchased the same goods from another supplier for trading (C), which is sold to purchaser (B) now, he (A) would have been paid VAT on it to (C). This vat is sellers (A) Asset (this is termed as VAT Input Credit). he can adjust this VAT Credit against his VAT liability (which is collected at the time of sale to B). This is the concept of VAT.
So for a trader or Manufacturer who paid VAT on his raw material and collect vat on his sale. The vat can be both asset and liability.
05 February 2010
VAT can be mentioned Input VAT & Output VAT
Input VAT- Taken from Purchase invoice- Asset
Output VAT-Charging on Sale invoice- Liability
Input VAT- Taken from Purchase invoice- Asset
Output VAT-Charging on Sale invoice- Liability
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