This query relates to hiring of a professional as a consultant by a firm or a company. Suppose the amount paid as retainership payment is Rs 20000 p.m. What would be the tds provisions attracted and the journal entry for the same in the books of the Employer or the person receiving the consultancy services. Is there an service tax liability on the part of the payer or receiver. Regards Punit
17 May 2013
TDS u/s 194J @10%(on the amount inclusive of service tax)...and Service tax liability of service provider only on whole amount @12.36%(assuming he is not covered under SSI)
In the books of the service provider
Monthly entries: Party A/c Dr. 20,225 TDS Receivable A/c Dr. 2,247 To consultancy income A/c 20,000 To Service tax payable A/c 2,472
In the books of the service receiver Professional Chgs A/c Dr. 20,000 Service tax expense(or CENVAT A/c) Dr.2,472 To Vendor A/C 20,225 To TDS Payable A/c 2,247
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