Hi All,
I have a problem with the input VAT. As per prevailing rules of VAT in Punjab Province of India, we are required to required to credit the “Input VAT” with the purchase VAT amount of an item IF we sell it free of cost.
I’ll quote an example here. I am manufacturing Bicycles and many a times I offer freebees to my customers such as free Bell etc. When I bought the Bells about a month ago, I claimed input VAT from Tax authorities. When I now sell these “Bells Free of Cost”, the Tax authorities want me to reverse the Claim I had made on purchase of these by way of crediting the “Input VAT” account by an amount equal to VAT of purchase of these items.
I am given to understand that there is no way of putting a credit memo which would generate such entries in the VAT Entry Table from where various VAT Reports / Returns are printed. A credit memo can be put into the system but it does not reflect in the VAT Reports !!
I would highly appreciate help with this.
Thanks & Regards
Ratninder