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Reverse charge
when a person purchase some goods and supplier also charged frieght .....now such person paid the purchase amt. alongwith freight ....and separately shown frieght as expense in p&l acc .....whether reverse charge is applicable in above case....??
Replies (3)
NO. Reverse charge mechanism is applicable in case of freight paid to goods transport agency. In this case, the purchaser is not paying anything to goods transport agency, so reverse charge mechanism is not applicable.
(Its always a good idea to not book such charges as freight in financial statements as if the same are scrutinised by deprtmental officials, they may get misled.)
you have to add to Purchase cost not account the expenses
jaganathan sir.....if i add such amt. in purchase then it will not match with the purchase in vat-20.....
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