whether refund of vat taxable in IT Act

sir i don't thinks so .....as VAT didn't allow as an expense....!

If it was allowed as an expense earlier at the time of payment(For eg..material for which no input credit is claimed), it will be taxable.(See Sec. 41)

Else.....Exempt.

>>Vipul Garg

 Whenever a purchase is made where VAT has been charged. Vat is debited to a seperate account i.e. Input tax credit a/c. If this amount is refunded it will just adjust the account.It has nothing to do with Expenses or income a/c.

Accounting Standard 2 issued by ICAI also requires that any tax if refundable should not be debited to purchase a/c.

Please suggest under what circumstances it will be debited in expense a/c

VAT refund will be taxable u/s 41(1) of IT Act, 1961. VAT composition tax is debited to P&L A/c. Otherwise VAT A/c separately maintained. VAT refund can be shown as Capital A/c adjustment like Income Tax refund.