Accounting Entries in VAT

A/c entries 30566 views 10 replies

kartik_somu

B.Com ACA CISA CIMA

1665 Points Joined May 2007

ACCOUNTING:

For VAT purposes, the dealer must record its turnover of purchases and sales in the accounts maintained by it. These accounts should:

* Be regularly and systematically prepared and maintained;
* Give a true and fair view of its dealings; and
* Be used by the dealer for determining its turnover of the business for commercial or income tax purposes.

The accounts will normally be prepared on the accrual basis i.e. the dealer must account for VAT in the period in which the consideration for the sale/ purchase is receivable/ payable (and not as money is received or paid). In accrual system sales are accounted for when the invoice is issued.

Accounting Entries :

A) For Input Tax Credit on Opening Stock :

The Accounting Entry to be passed for recording the Input Tax Credit is -:

Input Tax Credit A/c Dr.
Opening Stock A/c Cr.

B) For Purchases :

Nature of Transaction	Entry in Existing System	Entry under VAT System
Purchase of Capital Goods	Stock–MachineryA/c Dr. Excise Duty A/c Dr. Creditors A/c Cr.	Excise Duty A/c Dr. Stock–Machinery A/c Dr. Input Tax Credit A/c Dr. Creditors A/c Cr.
Packing Material Purchase	Packing Material Dr. Excise Duty A/c Dr. Creditors A/c Cr.	Excise Duty A/c Dr. Packing Material Dr. Input Tax Credit A/c Dr. Creditors A/c Cr.
Dies & Punches	Stock–Die & Punch Dr. Excise Duty A/c Dr. Creditors A/c Cr.	Excise Duty A/c Dr. Stock – Die and Punch Dr. Input Tax Credit A/c Dr. Creditors A/c Cr.
Consumables Purchase	Stock-Consumable Stores Dr. Excise Duty A/c Dr. Creditors A/c Cr.	Excise Duty A/c Dr. Stock- Consumable Stores Dr. Input Tax Credit A/c Dr. Creditors A/c Cr.
Raw Material Purchase	Excise Duty A/c Dr. Raw Material Dr. Creditors A/c Cr.	Creditors A/c Cr. Excise Duty A/c Dr. Raw Material Dr. Input Tax Credit A/c Dr.

C) i)   For Input transferred to other manufacturing unit outside the state :

Stock in Transit A/c                 Dr.
Raw Material A/c                     Cr.
Input Tax Credit A/c                Cr.
Excise Duty A/c                       Cr.

ii) For Finished Goods received from manufacturing unit outside State produced from taxable input transferred from State :

Input Tax Credit A/c                Dr.
Finished Goods A/c                  Dr.
Stock in transit A/c                 Cr.

D) For Transfer of Raw Material to Loan Licensee :

Nature of Transaction	Entry in Existing System	Entry under VAT System
Raw Material Stock Transfer	Cenvat in Transit A/c Dr. Stock in Transit A/c Dr. Excise Duty A/c Cr. Material Issue A/c Cr.	Cenvat in Transit A/c Dr. Stock in Transit A/c Dr. Excise Duty A/c Cr. Material Issue A/c Cr. Input Tax Credit A/c Cr.

E) For Bad Debts :

Nature of Transaction	Entry in Existing System	Entry under VAT System
Bad Debts written off	Bad Debts A/c Dr. Sundry Debtors A/c Cr.	Bad Debts A/c Dr. Output Tax A/c Dr. Sundry Debtors A/c Cr.

F) For Tax Payment :

1) Entry for Input Tax Credit available for adjustment from Output Tax

Local Sales Tax Payable A/c                            Dr.
Central Sales Tax Payable A/c                         Dr.
Input Tax Credit A/c                                      Cr.

The Input Tax credit available will be first adjusted towards Local Sales Tax payable and the balance available, if any, will be adjusted towards Central Sales tax Payable.

2) Entry for Input Tax Credit not available

Purchase A/c Dr.
Input Tax Credit A/c Cr.

Replies (10)

harinath

student

229 Points Joined February 2008

nice

Guest

429230 Points Joined August 2012

Dear Sir,

I want a all entries related excise

Guest

429230 Points Joined August 2012

Entries related to Excise will be more useful too.

Guest

429230 Points Joined August 2012

Thanks I was looking for this

hanspal

Practicing CA

26 Points Joined July 2008

Originally posted by :kartik_somu
"	ACCOUNTING: For VAT purposes, the dealer must record its turnover of purchases and sales in the accounts maintained by it. These accounts should:* Be regularly and systematically prepared and maintained;* Give a true and fair view of its dealings; and* Be used by the dealer for determining its turnover of the business for commercial or income tax purposes. The accounts will normally be prepared on the accrual basis i.e. the dealer must account for VAT in the period in which the consideration for the sale/ purchase is receivable/ payable (and not as money is received or paid). In accrual system sales are accounted for when the invoice is issued. Accounting Entries :A) For Input Tax Credit on Opening Stock :The Accounting Entry to be passed for recording the Input Tax Credit is -:Input Tax Credit A/c Dr.Opening Stock A/c Cr.B) For Purchases : Nature of Transaction Entry in Existing System Entry under VAT System Purchase of Capital Goods Stock–MachineryA/c Dr.Excise Duty A/c Dr.Creditors A/c Cr. Excise Duty A/c Dr.Stock–Machinery A/c Dr.Input Tax Credit A/c Dr.Creditors A/c Cr. Packing Material Purchase Packing Material Dr.Excise Duty A/c Dr.Creditors A/c Cr. Excise Duty A/c Dr.Packing Material Dr.Input Tax Credit A/c Dr. Creditors A/c Cr. Dies & Punches Stock–Die & Punch Dr.Excise Duty A/c Dr.Creditors A/c Cr. Excise Duty A/c Dr.Stock – Die and Punch Dr.Input Tax Credit A/c Dr.Creditors A/c Cr. Consumables Purchase Stock-Consumable Stores Dr.Excise Duty A/c Dr.Creditors A/c Cr. Excise Duty A/c Dr.Stock- Consumable Stores Dr.Input Tax Credit A/c Dr.Creditors A/c Cr. Raw Material Purchase Excise Duty A/c Dr.Raw Material Dr.Creditors A/c Cr. Creditors A/c Cr.Excise Duty A/c Dr.Raw Material Dr.Input Tax Credit A/c Dr.C) i) For Input transferred to other manufacturing unit outside the state :Stock in Transit A/c Dr.Raw Material A/c Cr.Input Tax Credit A/c Cr. Excise Duty A/c Cr.ii) For Finished Goods received from manufacturing unit outside State produced from taxable input transferred from State :Input Tax Credit A/c Dr.Finished Goods A/c Dr.Stock in transit A/c Cr. D) For Transfer of Raw Material to Loan Licensee : Nature of Transaction Entry in Existing System Entry under VAT System Raw Material Stock Transfer Cenvat in Transit A/c Dr.Stock in Transit A/c Dr.Excise Duty A/c Cr.Material Issue A/c Cr. Cenvat in Transit A/c Dr.Stock in Transit A/c Dr.Excise Duty A/c Cr.Material Issue A/c Cr.Input Tax Credit A/c Cr.E) For Bad Debts : Nature of Transaction Entry in Existing System Entry under VAT System Bad Debts written off Bad Debts A/c Dr.Sundry Debtors A/c Cr. Bad Debts A/c Dr.Output Tax A/c Dr.Sundry Debtors A/c Cr.F) For Tax Payment :1) Entry for Input Tax Credit available for adjustment from Output TaxLocal Sales Tax Payable A/c Dr.Central Sales Tax Payable A/c Dr.Input Tax Credit A/c Cr. The Input Tax credit available will be first adjusted towards Local Sales Tax payable and the balance available, if any, will be adjusted towards Central Sales tax Payable.2) Entry for Input Tax Credit not available Purchase A/c Dr. Input Tax Credit A/c Cr.	"

Yuvaraj Desai

Student

30 Points Joined October 2008

How to post accounting Entry for Additional Excise Duty Refund Receivable ( which was paid at the time of Relese of Material from Port to Custome by Chq)

ARUPRATAN BAGCHI

Accounts Manager

53 Points Joined March 2009

I have got VAT registration w.e.f. 01.12.2008. At that time R.M worth Rs 1, 00,000/- were lying in stock on which VAT of Rs 4,000/- was paid. According to VAT laws, I can get input credit of Rs 4,000/-. During the remaining period [i.e. from 01.12.2008 to 31.03.2009] Rs 25,000/- was paid as input tax on Purchase of Rs 5, 20,000/- [MRP Rs 6, 25,000/-] & Rs 23,000/- was payable on sales of Rs 5, 40,000/- [MRP Rs 5, 75,000/-]. I have made following entries in accounts:

1. Input Tax Credit a/c ...........................Dr 4,000/-

To Purchase a/c 4,000/-

2. Purchase a/c………………………….Dr 5, 20,000/-

Input Tax Credit a/c…………………Dr 25,000/-

To Sundry Creditors a/c 5, 45,000/-

3. Sundry Debtors a/c…………………….Dr 5, 63,000/-

To Sales a/c 5, 40,000/-

To Tax payable a/c 23,000/-

4. Tax payable a/c …………………………Dr 23,000/-

To Input Tax Credit a/c 23,000/-

I have shown the balance input tax credit of Rs 6,000/- [4,000+25,000-23,000] in the Assets side of the Balance side under the head Current Assets.

Whether all the entries & treatment are correct?

Ratnesh Chandra

Accounting Technician

27 Points Joined May 2011

it would be better to write input vat insted of input tax credit and show the balance under loans and advance in assets side of balance sheet.

U S Sharma

glidor@gmail.com

21068 Points Joined January 2010

Originally posted by : Ratnesh Chandra
	it would be better to write input vat insted of input tax credit and show the balance under loans and advance in assets side of balance sheet.

Why not "value added Tax"

one account will solve many entries.

Saurabh Goel

Ex. Account

46 Points Joined June 2013

Hi,

Good Morning !

We are exporter and we are purchasing material for packing purpose on vat. Now I want to know; can we book the packing material cost in expenses with local tax credit if YES. Please guite to us.

Regards

Saurabh Goel