Deducting output VAT of Sales Returns

We have been deducting Out put VAT on Sales Retunrs.

 

By passing following entries

When Sale is made

Party a/c Dr

To Sales a/c

To Out put VAT a/c

 

When Sales returns

Output VAT a/c Dr

Sales Returns a/c Dr

To Party a/c

Now department people are telling that VAT should not be deducted on sales return

Pls advice me

 

 

 

Replies (1)
you dr to vat input credit by way of credit note to customer. on sale return you can avail vat input. you have adjusted directly output tax you correct this by filing revise retuen.

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