ACCOUNTING TEATMENT FOR DETACTION OF STOCK VARIANCE BY GST DEPARTMENT

[CABIJENDERKUMAR BANSAL]

hello,

there was search and seizure by GST department for XYZ limited premises. they found physical inventory is not matched with books inventory. physical stock was less then books inventory by ₹ 3 crore and they raised demand for GST , interest , penalty . assesses accept it and paid all dues as per demand.

now query is what is accounting treatment in the books of XYZ ltd for stock to be decrease by ₹ 3 crore.

now

[Atul Mehrotra]

Sir, in my opinion, stock will have to be revalued by posting an entry in the general ledger.

Stock revaluation A/c Dr.

To Stock of RM/ FG/ WIP

This revaluation A/c will be charged to the Statement of P&L as expense.

AI Summary

Stock revaluation to reflect inventory shortage, with revaluation loss charged to the profit and loss account after GST demand compliance.
Physical inventory was found short of books, and the assessee paid GST, interest and penalty. The accounting treatment is to revalue stock by debiting a Stock Revaluation Account and crediting the stock accounts (RM/FG/WIP), with the revaluation account charged to the Statement of Profit and Loss as an expense.