Vat payable

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B Venkatesh (Querist)
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23 July 2015 Consider this:

Team B & Co a partnership firm, has Vat (liability)payable of RS.5000/- as on 31.03.2015, How to disclose this amount in Financial Statements (Balance sheet & P&L).

B Venkatesh

B Venkatesh (Querist)
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24 July 2015 Please Reply something

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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02 August 2025 Sure! Here’s how you should disclose the VAT liability of ₹5,000 as on 31.03.2015 in the financial statements of Team B & Co:

---

### 1. **In the Balance Sheet:**

* **VAT Liability** is a **current liability** because it is an amount payable to the tax authorities in the near term.
* It should be shown under the head **“Current Liabilities”** or specifically as **“VAT Payable”** or **“Other Current Liabilities.”**

**Example:**

| **Liabilities** | Amount (₹) |
| -------------------- | ---------- |
| Current Liabilities: | |
| - VAT Payable | 5,000 |
| ... | ... |

---

### 2. **In the Profit & Loss Account:**

* VAT is a **tax on sales**, so it is **not an expense** to be shown in the P\&L.
* Instead, VAT collected on sales is **deducted from gross sales** in the turnover.
* VAT paid on purchases can be claimed as input credit and adjusted against VAT liability.
* The net VAT payable or receivable is shown as a liability or asset in the balance sheet.

**So, in P\&L:**

* You **do NOT show VAT payable as an expense or income**.
* You show **sales net of VAT** in revenue.

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### Summary:

| Statement | Disclosure |
| --------------------- | ------------------------------------------------ |
| Balance Sheet | VAT Payable under Current Liabilities (₹5,000) |
| Profit & Loss Account | No entry for VAT payable; sales shown net of VAT |

---

If the VAT liability arises during the year and is unpaid as on the date, it remains a current liability in the balance sheet.

Let me know if you want a sample journal entry or further clarification!

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