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My question is why we debit the input tax, and cradit the
output tax. wt is the logic and wt is the principal behind
it
adil khan( CA STUDENT)

Question Posted / nitin

Answer Posted / nitin

when u r selling sumthing , u you are liable to pay tax to
the govt(vat,cenvat)...this tax being a liability , you
credit it...

but you also pay this tax when you purchase somthing as the
seller will add his own tax liability to the cost of the
product...tax is levied on you indirectly...since you have
now already paid the tax it becomes an asset...

asset-liability = tax payable/refund

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