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Notional ITC
To handle Notional ITC, Two VAT Classes are provided as under: -

1.      Purchase Local Exempted from Exempted Unit
2.      Notional Input Tax Credit


Entries should be passed as under: -
  
A/c Head
B/S class
VAT Class
Debit
Credit
Purchase Exempted
Purchases
Purchase Local Exempted from Exempted Unit
5000.00
 
Notional ITC
Other Current Asset
Notional Input Tax Credit
200.00
 
Notional ITC on Purchase
Purchase
Purchase Local Exempted from Exempted Unit
 
200.00
Party A/c
S.Creditor
 
 
5000.00

In the above example Notional ITC on Purchase A/c should be attached with the Balance Sheet class Purchases. This A/c shall appear on credit side of the Trading A/c alternatively same Purchase A/c may be used to credit the Notional ITC amount in which case net purchases will be shown in Purchase A/c.

When Notional ITC on Purchase A/c is credited, you are prompted to select sub VAT Class. Select 'Others' from the sub class selection list as shown below:

graphic

In Form VAT-24, 5000.00 will be shown as Exempted Purchase, Tax Amount will be NIL.

In Form VAT-15, Form VAT-16, Gross Purchases of Rs. 5000.00 will be shown as Exempted Purchases and Notional Input Tax will be shown as Rs. 200.00