22 September 2009
i came across 2 different aspects regarding service tax while finalisation.. plse help me to understand the same.. one company treated service tax A/c under duties & taxes under current liability & also claimed service tax credit which they have collected on purchase bills to be set off against their ST liability.. & if any amount remain to be claimed they pass it on to next month for set of agnst that months liability 2 nd company they created service tax under indirect expense A/c & their collection of ST i.e. on purchase bills shown in final accounts as indirect expense in p & L A/c as thier debit amount exceeds their credit i.e ST payable by them in debit notes raised by them... i dont understand treatment given by 2nd company as their accountant told me that ST is indirect expenses but i think they are showing ST as expense ( & not taking benefit of credit ) to reduce the profit .. plse help me to understand the same
22 September 2009
If they were treating as expenditure it is not wrong but they were not using the benefit of credit whihch is allowed by the Finance Act as Input Credit but they were only for saving a little amount of Income Tax paying whole amount to Govt Eg. Service Tax treated as Expenditure is Rs 40,000 now if they claim as expenditure they can save only 30% of it though if they taken inout of same they save whole amount
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