I have a Service Centre of Electronic Goods in Punjab and a branch in Delhi. First Question: I purchase PART : XYZ from Company in Punjab and billing is from Punjab Warehouse say for Rs.100 + 14.3% Tax = 114.3. I consumed part in Warranty , how to show this consumption in books as company will give claim at original cost i.e. 100 + 14.3% Tax = Rs.114.3 . Does this consumption will act as a Sale of Goods or it will act as Purchase Return. If it act as Sales of Goods then problem arises of income tax as they calculate profit @8% on sales of goods in books. Second Question: I purchase same PART: XYZ from Company in Delhi and billing is from Delhi Warehouse and shipping also to our Delhi Branch but bill to address they are showing as our Punjab Office. Bill Details : Part Cose : Rs.100 + 12.5% tax = Rs.112.5 I consume the part in Delhi to customer and put a claim to Company. Now Company is giving me claim amount according to Punjab tax, i.e. Company is reimbursing same 14.3% tax to us for the parts consumed in delhi also. How we will put this in books
Hello Sir,
In Question One you can claim it as a Purchase Return.
In question two, it is an error on the part of your company ask them not to do such transactions and re-imburse the claim according to the state laws from where they have sent the goods otherwise it will be an issue to you regarding your Sales Tax matters.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Thanks Rohit for your answer, I have a follow up question : For First Question: Can we regularly put the warranty claim entries as Purchase return ? Till how much time we can return the goods in books ? Suppose we purchase part in January 2016 , can we put purchase return in books in January 2017 , i.e. next financial year ? If yes , then Ok otherwise please post solution For Second Question : Will it be a problem for company or for us ? If for a company , how we will put that entry into our books ? If it is a problem for us, please understand Our company is not ready to solve our matters , we have to look for a solution , thats is the reason I posted the questions here.
Hi,
As in your case , your are receiving the reimbursement from the company for the replacement of the spare parts
it amounts to the sale .
here is the link for the case laws regarding this:
if you are maintaining the books of you can show lesser profit then 8% and pay taxes according.
regarding second question:
you can ask the company to pay the money on the basis of invoice amount raised as the good are delivered in Delhi and liable to Delhi vat. otherwise while filing vat return you have to mentioned that you have received excess of VAT.
Hi
I understand my professional colleagues have answered your questions.
Regards
Keerthiga
I am sorry, but none of the answer is completely satisfactory.