C FORM ENTRY

Legal expenses account. LEGAL expenses account  WRITTEN IN DEBIT SIDE OF PROFIT & LOSS A/C

150k is sales tax liability.

Since ITC is not availed on interstate purchases under VAT/ Sales tax , purchaser issue the C Form . In this case VAT rate would have very less and payment to seller will also be less to this extent..

If C Form is not produced by buyer then buyer is liable to pay balance Vat to seller .


In the books of Seller

Debtors A/c Dr

To VAT Liability

VAT has to be paid to dept and it has to be recovered from customer