What would be journal entry for purchase invoice

For e.g. I purchase goods worth 5 lakhs from ABC Co. and i get purchase invoice for it. Now, in the bill, goods are worth 4.5 lakhs and 25 thousand is for Service Tax and 25 thousand is for VAT. This is just a example. In this case, when i am passing journal entry, what would be the journal entry. Should there be a seperate legder for the Service Tax and VAT or not. Because, in the end, i have to pay 5 lakh to ABC Co. so whats the point of passing a journal entry for Service Tax and VAT. 

 

According to me, To Purchase A/C 5 lakh and By ABC Co. 5 lakh

but my friend says, To Purchase A/C 4.5, To Service Tax 25k, To VAT 25k and By ABC 5 lakh.

 

Which one is correct or both of us are wrong?

 

 

 

Replies (2)

1) If input tax credit for input vat & service tax can be taken :-

Works or Purchase A/c      Dr.   4.5

Input Service Tax A/c Dr.  0.25

Input VAT A/c  Dr.    0.25      

  To ABC                                   5

2) If input tax credit for input vat & service tax cannot be taken:-

Works or Purchase A/c    Dr.    5

   To ABC                         5

 

Mr. Vishal Gupta suggestion is obsolutely correct. Input tax credit is to be consider.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
ARTICLESHIP 26 August 2026
CA Article Assistant/CA Drop Out/Accounts Executive

PARV & Co.

New Delhi

CA Inter

View Details
Company
16 September 2026
Internal Audit - Team Lead

Consulting & Beyond

Chennai

CA

View Details
Company
21 August 2026
Finance Manager

Resollect Technologies Pvt Ltd

Mumbai

CA

View Details
Company
28 August 2026
Assistant Manager

NRS AND ASSOCIATES

Kozhikode

CA Inter

View Details
Company
Featured 12 September 2026
Assistant Manager - Finance & Compliance

Naveen Fintech Pvt Ltd

Kolkata

CA Inter

View Details
Company
09 September 2026
SENIOR AUDITOR & ACCOUNTS MANAGER

Anupam Parashar & Co.

Ghaziabad

CA Final

View Details
Company
25 August 2026
Senior Accountant

MG Associates

New Delhi

CA Inter

View Details
Company
Featured 11 September 2026
Audit Executive

RBSM Corporate Advisors Private Limited

Pune

CA

View Details