Vat payable
This query is : Resolved
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).
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).
24 July 2015
Please Reply something
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.
---
### 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!
---
### 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.
---
### 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!
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Tax Liability on Trading Account in Name of Person with Disability (Autism) Operated by Guardian
- TDS on Purchase of Goods 194Q
- Dinner party and 194Q
- GST RATE FOR CONSTRUCTION OF ROAD
- Seeking expert opinion on holding vs exit of parternship-owned warehouse business
- I want to Close my LLP
- COMPLIANCE FOR HUF AFTER DEATH OF KARTA
- Profit and sale of mutual fund by the trust
- Invertted duty struture
- Order from Department U/s 74
- AMC Contract &GST &Income Tax
- TDS Return filing if only have 15G /15H deductions and no other payments
- IMPORT OF GOODS CREDIT
- 80G deduction eligibility
- GST on Tobacco - as per new notification
- Cant amend a 26QB
- Gst no of supplier cancelled from 2017
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Composition Dealer GST Annual Return Filing process
- TDS under section 195.
Trending Online Classes
-
Online GST Course - Master the Fundamentals of GST with Practical Insights
Ruhi Joshirao19 January 2026
CAclubindia
