30 October 2010
Sir, My company is working on SAP module. In case of services obtained and bills received from a foreign service provider, our engineers will make a SERVICE ENTRY in system for invoice value for which system will create the liability entry in books by taking the Mean Exchange rate from system. When the finance team releases the payment at a later date, system will create an entry for service tax at the conversion rate at which the liability has been created while SERVICE ENTRY is made irrespective of the rate at which the actual payment takes place at a later date. This creates a problem with service tax people that there is a difference in fluctuation in actual service tax due on payment date compared to the liability creation date. Is there any guideline in service tax for conversion of FE payments for the purpose of arriving service tax amount?
CAclubindia
