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VAT is a tax on the amount by which the value of an article has been increased at each stage of its production or distribution.
When Goods are bought and you have to pay both purchase value and VAT input or paid both, at that time, following journal entry will be passed.
Purchase Account Dr. (Value of Purchase)
VAT Input Account Dr. ( VAT on Purchase)
Cash or Bank or Name of Creditor Account Cr. (Value of Purchase + VAT input)
When Goods are Sold and you have to receive both Sale Value and VAT Output or received both, at that time, following journal entry will be passed :
Cash or Bank or Name of Customer Account Dr. (Value of Purchase + VAT output)
Sale Account Cr. (Value of Sale)
VAT Output Account Cr. (VAT on Sale)
When We pay the Net VAT (Payable) to Government. At that time, following journal entry will be passed:
Net VAT Payable Account Dr. ( Excess of VAT Output over VAT Input)
Bank Account Cr.
A value-added tax (VAT) is a type of consumption tax that is placed on a product whenever value is added at a stage of production and at final sale.
When Goods are bought and you have to pay both purchase value and VAT input or paid both, at that time, following journal entry will be passed.
Purchase Account Dr. (Value of Purchase)
VAT Input Account Dr. ( VAT on Purchase)
Cash or Bank or Name of Creditor Account Cr. (Value of Purchase + VAT input)
- Value added tax is a type of consumption tax that is placed on a product when value is added at a stage of production..also it's as a goods& services tax.is collected incrementaly,based on the value of added.
-It 's an indirect tax on domestic consumption of goods& services, expected those that are zero- rated.
In India the VAT when we make payment for bills to suppliers we will Dr material to the vales-less VAt, Dr VAT A/c for that value credit bank a/c. Then when payment of our VAt ,that amount of VAT paid will be adjusted against the amount to be paid, balance will be paid by cheque or a/c trfr.This is to my knowledge.
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