Urgent query on composite scheme

Others 526 views 2 replies

Hello Evryone ..

One of my client is in the composite scheme & its buisiness Comes under Resturants & clubs .

so, its liable to pay 5% of VAT on Sales Amount..

Now my Question is :

1.How is 5% VAT to be caculated as per the new Notification ? (The new Notification says that VAt should not be colect on the bill & it is to be paid Out of Pocket)

2.How to Account the same VAT Paid in our Books..?

Thanks alot in advance..

Replies (2)

1. 'Vat is not to be collected' means u can't charge vat to ur customers. Vat will be calculated on the total sales at the end of month/quarter. For eg. U made a bill to a customer for rs.10000 for service rendered. U can't charge vat to ur customer. Thus, ur billed amount would be rs.10000 only. At the end of month, suppose total sales amounts to rs.100000, you are required to pay rs.5000 (i.e. 5% of rs.100000) as vat. 2. Because there is no provision for tax credit in composition sceme, the tax paid by you is an expense. The entry would be: Vat (expense) A/c Dr. 5000 To Bank A/c 5000