The following example is demonstrated assuming that you have gone through the VAT Computation section.
Purchase Returns - Debit Note
Let us consider the following Purchase Returns entry:
Once this is done, the VAT Computation is displayed as shown below.
In the Purchases section, Rs. 500 is reduced from the Assessable Value and Rs. 20 is reduced from the Tax amount (while comparing with the VAT Computation before Purchase Returns). Therefore the VAT Payable is now Rs. 295.36
The VAT Computation Report will now show as follows:
Sales Returns - Credit Note
Let us take the example of a Sales Return.
The VAT Computation screen will now show as follows:
The Assessable Value under Sales has reduced from Rs. 25,000 to Rs. 23,500 and the Tax Amount has reduced to Rs. 640.00. This will show in the Reports as follows:
Therefore the VAT Computation and Reports are updated automatically as you pass the entries.