Revenue recognition and VAT Compliance - Professionals - Accounting - TIK Share

Revenue recognition and VAT Compliance


CA Pulkit Sharma

2014-02-14

One of my client has a very confusing situation. Please guide on this:

Client is a marketing company. Client has appointed one C&F agent. The agreement between client and C&F agent is as follow:

  1. C&F agent will raise the bill on his own firms name and not on the name of company of client.
  2. Monthly VAT liability will be paid by client to C&F agent.
  3. Client will transfer the stock to C&F and C&F agent will sell the material, read 1.

My questions are:

  1. How will the client recognise Revenue, since billing will be done by C&F agent?
  2. Client will pay the VAT liability to agent, how he will show liability in his account without billing?
  3. As per the agreement client will pay commission to C&F agent, on what basis the revenue document of client be generated?

CA Sundeep Kamath

2014-02-15

Mr. Pulkit the answer lies in the question itself.

However, to have a freehand information, would like to know the following

A. Client is a pure marketing company (Only Promoting services) or is even engaged in procurement of goods.

B. Where does the marketing company acquires goods to supply to C & F.

C. Is the Marketing company registered under VAT or is an Unregistered dealer.

D. Is the transaction is of Consignor and consignee

 

I beleive with information on above, you will have clear picture on the aspects you have put forth.

 

Regards,

CA.Sundeep Kamath

skamath@saasintellect.in

Bangalore

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CA Pulkit Sharma

2014-02-15

A. Client is a pure marketing company (Only Promoting services) or is even engaged in procurement of goods.

Client is not in purely marketing. He gets the manufactured from contractors. VAT input is available.

B. Where does the marketing company acquires goods to supply to C & F.

Within state and also from outside the state.

C. Is the Marketing company registered under VAT or is an Unregistered dealer.

Registered

D. Is the transaction is of Consignor and consignee?

Yes

Transactions should be carried out in what way so that revenue of client is recognised and vat documents are generated.

 

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