17 May 2011
I want to know that when TDS is not allowed under section 43B then, Why service tax is allowed under section 43B when we are not debiting it to our P&L ???
18 May 2011
TDS paid is like an advance Income Tax paid to Government. It is not an expenditure. It can be deducted from the Companies Tax liability to Government and balance payable to Government account. If the tax liability is less than the TDS paid, the amount will be refunded back by Government. Service Tax is added to the service by the service provider just like VAT on goods supplied. It is part of the cost of services. Hence it is debited fully as expense. However if the company in question is also a service provider, subject to conditions service Tax can be deducted from the Service Tax recovered from its customers and remitted to Government. In such case the Service TAx is not to be debited to PL account, but debited as current asset and credit taken while remitting the service TAx
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