Accounting Entry
This query is : Resolved
01 August 2016
Our Company Purchase a machinery from Gujrat.
Machine Cost 12000.00
Ex Duty12.5% 1500.00
Cst2%. 270.00
Total 13770.00
And our Company Reg in Service tax and take Input Credit of Excise Duty paid on the machinery at the time of purchase against the service Tax charge by our company while providing Job Work service .
So what Entry Will Pass for the Purchase Bill of machinery . with keep in mind CST 2% And Excise Duty
Message likes :
1 times
14 July 2024
To account for the purchase of machinery including Excise Duty and CST (Central Sales Tax), and to properly record the input credit of Excise Duty for Service Tax purposes, you would follow these accounting entries:
### Purchase of Machinery
1. **Purchase of Machinery Including Excise Duty and CST**:
Given the details provided:
- Machine Cost: Rs. 12,000.00
- Excise Duty (12.5% on Rs. 12,000.00): Rs. 1,500.00
- CST (2% on Rs. 12,000.00): Rs. 270.00
- Total Invoice Amount: Rs. 13,770.00
```
Dr Machinery (Fixed Asset Account) 12,000.00
Dr Excise Duty Input (Asset Account) 1,500.00
Dr CST Input (Asset Account) 270.00
Cr Accounts Payable (or Bank Account) 13,770.00
```
- **Explanation**:
- **Machinery**: Debit the Machinery account with the cost of the machinery excluding Excise Duty and CST.
- **Excise Duty Input**: Debit this account to record the input credit of Excise Duty paid, which can be offset against Service Tax liabilities in the future.
- **CST Input**: Debit this account to record the input credit of CST paid.
- **Accounts Payable (or Bank Account)**: Credit this account to record the liability to pay the supplier (or actual payment if made through bank).
### Input Credit for Excise Duty
2. **Utilization of Excise Duty Input Credit Against Service Tax Liability**:
When you use the input credit of Excise Duty against your Service Tax liability for job work services provided:
```
Dr Service Tax Payable (Expense Account) XXX
Cr Excise Duty Input (Asset Account) XXX
```
- **Explanation**:
- **Service Tax Payable**: Debit this account to recognize the expense or liability for Service Tax on job work services provided.
- **Excise Duty Input**: Credit this account to offset the Service Tax liability, as you are utilizing the input credit of Excise Duty.
### Additional Considerations:
- Ensure compliance with GST (Goods and Services Tax) regulations if applicable, as the Excise Duty and CST might be integrated into GST.
- Keep detailed records and documentation of the purchase invoice, Excise Duty payment, and CST payment for future audits and compliance checks.
By following these entries, you correctly account for the purchase of machinery, including Excise Duty and CST, and ensure proper utilization of the Excise Duty input credit against Service Tax liabilities when providing job work services. Always consult with a tax advisor or accountant familiar with local tax laws to ensure compliance and accurate reporting.
### Purchase of Machinery
1. **Purchase of Machinery Including Excise Duty and CST**:
Given the details provided:
- Machine Cost: Rs. 12,000.00
- Excise Duty (12.5% on Rs. 12,000.00): Rs. 1,500.00
- CST (2% on Rs. 12,000.00): Rs. 270.00
- Total Invoice Amount: Rs. 13,770.00
```
Dr Machinery (Fixed Asset Account) 12,000.00
Dr Excise Duty Input (Asset Account) 1,500.00
Dr CST Input (Asset Account) 270.00
Cr Accounts Payable (or Bank Account) 13,770.00
```
- **Explanation**:
- **Machinery**: Debit the Machinery account with the cost of the machinery excluding Excise Duty and CST.
- **Excise Duty Input**: Debit this account to record the input credit of Excise Duty paid, which can be offset against Service Tax liabilities in the future.
- **CST Input**: Debit this account to record the input credit of CST paid.
- **Accounts Payable (or Bank Account)**: Credit this account to record the liability to pay the supplier (or actual payment if made through bank).
### Input Credit for Excise Duty
2. **Utilization of Excise Duty Input Credit Against Service Tax Liability**:
When you use the input credit of Excise Duty against your Service Tax liability for job work services provided:
```
Dr Service Tax Payable (Expense Account) XXX
Cr Excise Duty Input (Asset Account) XXX
```
- **Explanation**:
- **Service Tax Payable**: Debit this account to recognize the expense or liability for Service Tax on job work services provided.
- **Excise Duty Input**: Credit this account to offset the Service Tax liability, as you are utilizing the input credit of Excise Duty.
### Additional Considerations:
- Ensure compliance with GST (Goods and Services Tax) regulations if applicable, as the Excise Duty and CST might be integrated into GST.
- Keep detailed records and documentation of the purchase invoice, Excise Duty payment, and CST payment for future audits and compliance checks.
By following these entries, you correctly account for the purchase of machinery, including Excise Duty and CST, and ensure proper utilization of the Excise Duty input credit against Service Tax liabilities when providing job work services. Always consult with a tax advisor or accountant familiar with local tax laws to ensure compliance and accurate reporting.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Tax implications of gift to maternal uncle
- Closure of a PVT LTD company
- Input Tax Credit Puf panels
- ROC filings for the first year of incorporation
- 26QB correction - no data available error for fully consumed/processed with default
- Real estate business by a partnership firm where both of the partners are SC/ST
- TDS on Purchase of Immovable Property in case of Co Owner
- When I Login E-invoice portal with waybill user id and pw, it is showing 3011 error data
- How to open attachment in 23ac xbrl
- Partnership deed reconstitution in how much stamp paper in uttar pradesh
- Income tax planning
- Stock statement procedure bank od loan monthly report
- Please help with SAC Codes (6 digits) for below mentioned services provided by Chartered Accountant
- Printing Press under Composition Scheme
- 140-A Tax Wrongly Paid PAN No
- CSR funding for private limited companies
- Professional tax deduction monthly
- Cross charges verses Isd methof
- Refund Application in RFD 01 for Export without payment of tax
- Ewaybill bill to ship from
CAclubindia
