Generally VAT has to be collected by the person who is registered as per VAT Act, 2052 and engaged in selling of Goods or providing services in Nepal.
In the following cases, buyer of the Goods or Services is required to pay VAT to the revenue itself which is known as reverse charging. Person need not issue any self-invoice in case of reverse charging as in many countries requires so:
Service receiver from foreigners: According to sec 8(2) any person (registered or not under VAT Act) in Nepal receive services from person outside Nepal need to pay VAT for services received. If the person is registered person, it can claim the VAT paid as credit same as other purchases on the basis of payment voucher.
Construction of Businesses Structure: According to sec 8(3) any person (registered or not under VAT) in Nepal engaged in constructing of commercial buildings, apartments, shopping malls or construction of similar nature of value more than NPR. 5 millions performs such works/ Purchases from the person who is not registered under VAT, need to pay VAT on the construction cost if the purchases is not made through the person who is registered under VAT. (kindly refer another blog on the same topic http://rpandeyassociates.blogspot.com/2017/05/reverse-charge-in-vat-section-83.html).
Importation: If any person imports goods from abroad, VAT need to pay at custom point as destination based tax.
Accounting for Reverse VAT:
Reverse VAT is to be shown separately in books of account. A sample journal entry (entry opinion may differ).
Thanks for sharing this explanation!
ReplyDeleteTax Advisor
how is reverse vat treated in books of account
ReplyDeleteExpense A/c Dr.....................
ReplyDeleteVAT (Receivable) A/c Dr.....................
To Party Account Cr ....................
To TDS Payable Account Cr..................
To VAT Payable Account Cr..................
sir yo entry chai bujhena maile
DeleteCan you please specify the TDS withholding rate for payment to foreign party for receiving consulting service? i'd appreciate if you could provide the reference
ReplyDeleteGenerally we are practiced for deduction of 15% TDS and 13% VAT assuming the agreed amount is 85% and calculate 13% VAT in 100% amount. but i have seeking the base of these entry. VAT directives is also silent for these case.
DeleteExample:
DeleteAgreement Amount Nrs. 100,000 (if VAT invoice were raised, Nrs. 113,000)
Hence,
Expense A/c Dr.....................100,000
VAT (Receivable) A/c Dr.............13,000
To Party Account Cr ......................85,000
To TDS Payable Account Cr.................15,000
To VAT Payable Account Cr.................13,000
Section 88(1) says Payment by resident person, for, Service, Commission, Sales Bonus etc., Applicable TDS rate would be 15%. (this is general clause)
DeleteIn this case receiver can be non-resident. Again, Provisio 2, states, in case of payment of commission to non-resident person by a resident company, the TDS rate is 5% only.
From above we conclude that 15% is applicable for payment to non-resident against services received.
As per your example where should this 13000 both dr & cr reflect in maskewari, either on sales /purchase or anya thap ghat?
DeleteThanks for the information On VAT Returns and its Filing.
ReplyDeletein whose name should we deposit vat
ReplyDeletehow and where to pay this amount and can we paid it govt. in this lockdown period?
ReplyDeleteto*
DeleteCan you please advice reverse vat charge regarding Training received from International Organization in Nepal and Outside Country. It may be Online or self physical participation.
ReplyDelete