VAt accoutning

it can be mangaed by 'vat output a/c.' and 'vat input a/c.' under the head of duties and taxes. at the end of month whatever amount payable will be directly paid thru bank or cash and settled this way. no effect at p&l account.

hi sorry for not ans,. the question well, you are FRG student {profile visit} what is FRG ? thx nd rgd Aul

Dont know

vat paid Never come to dr side of P & L account for simple reason . Vat is collected from customer and paid to govt after ded. vat credit. always vat paid either be equal to vat colleted or reduced by vat creidt

hi riya, i think u'r doubt is clarified by now, well it is easy to remember , it is composite tax , than vat paid i.e, composite tax paid which means that u r not taking the credit of input rather u r paying ur tax on output at a flat rate, then it shoud b treated as indirect expenses. In other case if it is not a composite tax , then create seperate a/c heads under Duties & Taxes such as output vat 4% , output vat 12.5%, Input vat 4% , Input vat 12.5%, & have a control a/c called sales tax payable or vat payable a/c under Duties & taxes. At the end of every month pass this entry, By output tax 4% BY output tax 12.5% To Input tax 12.5% To Input tax 4% & the balance if any should b Dr. or cr sales tax Payable a/c, In case if u have any credits of Vat in the previous month pls don't forget considering in this month return as thsi may lead to mistakes i hope i hve not confused u for any further Queries u can contact me at gnanika_nagesh @ yahoo.com

the amount of vat collected or Input tax paid or VAT remittance will never come in P& L account....becoz VAT collected a/c s set off by Input VAT paid and the balance by the remittance to govt...If anythng remaining it will be a vat receivable ( Refund Due) or a VAT payable(current liability)...There wont be any effect on P&L a/c... In the new ITRs therez a separte coloumn for VAT collected and VAt paid along wit respective Purchase and Sales... If we show VAT paid or VAt collected on P&L ,, it will be having an effect on profit...

is it correct?

Hi Riya I think, u should keep in mind the basic accounting rules. as per that, VAT Collected is a due to Govt. and therefore a liabilty whether the dealer has opted for composition scheme or not. hence entry will be to debit the reciever of goods (Customer) and credit the Liability payable as Output VAT (Rates & Taxes)[Current Liabilities]. And Input Vat paid to supplier is an Asset [Credit facility] to be adjusted against our liability to pay output tax [grouped under the same head of current liability]. Therefore entry is to Debit the Asset along with purchase and credit the supplier. Difference is paid/refunded. Ganika is also required to think over it.

Hi all, thanks for logical reply Mr Jai prakash, even i had the same opinion but couln't put it properly, anyway sorry riya for confusing you.

Hi I have a doubt..Let me ask you it through an example.

Purchase entry :

Purchase A/c Dr.     5000

Vat 5% on Purchase A/c Dr.  

Hi I have a doubt..Let me ask you it through an example.

Purchase entry :

Purchase A/c Dr.                 5000          ( under head Purchase )

Vat 5% on Purchase A/c Dr.  250           ( under head Duties & Taxes - Current Liabilities )

Partys Name A/c Cr.                     5250  ( under head Sundry Creditors )

Sales entry :

Cash / Bank A/c Dr.            5775              ( under head Cash /  Bank )

Sales 5% A/c Cr.                           5500   ( under head Sales )

Vat 5% on Sales A/c Cr.                  275    ( under head Duties & Taxes - Currest Liabilities )

 

Vat Computation :

Out put Vat or VAt Payable        275

In put Vat or Vat paid                 250

VAT Payable                              25

Can you explain me following VAT entry in Tally with ledger group : - 

1) If Vat Return period is 01st April To 30st September & Vat paid Rs. 25 befor 21st October.

2) If Vat Return period is 01st October To 31st March  & Vat paid Rs. 25 after 31st March          during the year.