Vat treatment

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This query is : Resolved

Prince (Querist)

10 June 2014 SIR

VAT PAID ON PURCHASES - 100000
VAT COLLECTED ON SALES - 200000
VAT BROUGHT FORWARD - 50000
(OPENING VAT)

I PASSED THE ENTRY IN TALLY

1) VAT TAX A/C DR 100000
MVAT O/S A/C 100000

2) MVAT O/S A/C DR 50000
VAT B/F 50000

THEREFORE NET VAT LIABILITY SHOWN UNDER THE HEAD CURRENT LIABILTY IS RS 50000 AND VAT TAX IS SHOWN UNDER THE HEAD DIRECT EXP IN TRADING ACCOUNT RS 100000/-.

I WANT TO KNOW WHETHER THE ABOVE TREATMENT IS CORRECT OR WRONG? FURTHER IF IT IS WRONG PLZ SUGESST A CORRECT TREATMENT.

THANKYOU

Amit Jolly

Amit Jolly (Expert)

11 June 2014 Hi,

1.When you purchased the goods entry should be:

Purchase A/c Dr xxx
Vat Input Credit A/c Dr 100000
To vendor A.c Cr xxx+100000
(for purchase of goods)

2.When you sell the goods entry should be
Customer A/c Dr xxx
To Sales A/c Dr xxx
To Vat Payable A/c 200000
(for sales of goods)

3.For input credit b/f:

no entry already lying in vat input credit A/c ....just show it in opening of this A/c i.e. all balances of trail balance goes in there relevant accounts.

when you pay tax than adjust your input lying with you including b/f input, entry should be:

Vat Payable A/c Dr 200000
To Vat Input Credit A/c Cr 150000
To cash/bank A/c Cr 50000
(for tax paid after adjusting input credit)

The above set of treatment is followed in all MNCs.

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