Accounting and Tax treatment of Retail Mobile Shop

Question Asked by Student

I am the regular e-mail reader of your accounting education site and I learned extra which I don't know. thanks for it.
but I have still facing the problem about accounting and tax rule of retail mobile shop in which the translation are as under :

*** purchase the recharge coupon & mobile easy recharge balance with commission

*** sale the recharge coupon & mobile easy recharge balance with mrp.

so ,in this case , what the rules and regulation are affected in the account of this type of business. also says about the tax rules .and vat is applicable or not ?

i hope i would find my answer early if possible.


Answer from Accounting Teacher

I think that you are operating your self -employed shop which comes under sole trade . I also think that you are operating tally software .

Because recharge coupon is your business stock , so you will deal it simply current assets .

first of all , you have to make stock item and stock measurement , I think also that you purchase it on per piece basis . Then pass the following journal entry .

Purchase account ( under Purchase account ) Dr.

Bank Account ( Under bank Account )Cr.

If you have keep tally in single mode then , you need not pass above entry , just click purchase voucher and take account type bank and fill , your item not only recharge coupon but also , if you have purchase any mobile of different companies , that can also write here and , accept purchase voucher in tally 9 .

I think , you have obtained commission when , you sell it to customer , then it can be showed as your income and pass the voucher entry of receiving amount in receipt voucher . If you sell easy recharge coupon and you have earned money it will also pass voucher entry of sale in single mode .

or if you want to double entry mode then

bank account dr.

sale account cr.

Tax treatment of Mobile Shop business

income tax

Income tax is one sole trade is your personal expense , so it will not show in your business record , if you have taken any money from business for paying income tax it will be your drawing and you will capital of business will be reduce with same amount

Here is the income tax rate slab and according to this , you have to pay your income tax .

Taxable income slab (Rs.) Rate (%)

Up to 1,50,000 Up to 1,80,000 (for women)Up to 2,25,000 (for resident individual of 65 years or above) → NIL

1,50,001 - 3,00,000 → 10 %

3,00,001 - 5,00,000 → 20 %

5,00,001 upwards → 30%

*A surcharge of 10 per cent of the total tax liability is applicable where the total income exceeds Rs 1,000,000.

Note: Education cess is applicable @ 3 per cent on income tax, inclusive of surcharge if there is any.


VAT is on sale of recharge coupon is 4 % . In law , it is duty of businessman who sells these card , have to pay VAT 4 % but , you can get credit or you can deduct the amount of VAT which is included when you bought these recharge coupons .

Suppose , you are retailer and buy recharge coupon at Rs. 300 with VAT Rs. 12

Now , if you sell it at Rs. 400 include VAT Rs. 16 , then you will deposit VAT to Govt

= Output VAT - Input VAT = Rs. 16 - Rs. 12 = Rs. 4

Service Tax

There is no service tax , because you are not providing any service .

Read Also






access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank Bank reconciliation banking basic accounting BBA benefits best bill black money blog bloggers book keeping bookkeeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation Diwali Messages documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps Google Adsense google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. GST guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting Intangible interest international Internet Introduction of Tally 9 inventory investment investment in Shares invoice IT Japan Job costing journal entries Journal Entries eBook Help Kalculate keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms word ms. excel multi currency in tally 9 Multicurrency Accounting mutual fund national security new and sacrifice ratio new york times new zealand news NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online application online accounting Online Accounting Course otcei pakistan parents Partnership pay pal pdf Personal Finance pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share share trading Shares shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally tally 9 Tally 7.2 Tally 9 Tally.ERP 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance truthfulness tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching wikipedia working capital youtube
Accounting Education: Accounting and Tax treatment of Retail Mobile Shop
Accounting and Tax treatment of Retail Mobile Shop
Accounting Education
Not found any lecture VIEW ALL Continue reading Reply Cancel reply Delete By Home PAGES Lectures View All RECOMMENDED FOR YOU Category ARCHIVE SEARCH ALL Lectures Not found any lecture match with your request, please help to write it and send it to our email at for making this website free accounting and finance encyclopedia. Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock