The Institute of Chartered Accountants of India has approved the guidance note on accounting for state level value added tax.
The guidance note requires that the input tax paid on purchase of inputs and capital goods which is available as VAT credit should not be included in the cost of purchase.
The note also requires that input credit available on opening stock at the commencement of the scheme should be credited to the opening stock account.
The guidance note has specified that VAT collected from the customers should not be included in the sales figure and similarly VAT paid should not be treated as expenditure in financial statements.
The guidance note recognises that the VAT payable on sales in an indirect tax that would ultimately be borne by the final consumer.
The guidance note which deals with many accounting issues that are likely to arise on implementation of the state level VAT would be released shortly.
