input tax credit

This query is : Resolved

Report Abuse Follow Query Ask a Query

geeta

geeta (Querist)
Follow

15 January 2011 how to do the accounting treating of input tax credit in services?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
Follow

15 January 2011 Input credit need to take on payment basis( after making payment for the bill)

you can create 2 different account for each credit

1. Cenvat -Service tax (Interim)
2. Cenvat- Education cess (Interim)
3. Cenvat- SHE Cess (Interim)

these 3 accounts can be used while taking credit & create follwoing

1. Cenvat -Service tax (Final)
2. Cenvat- Education cess (Final)
3. Cenvat- SHE Cess (Final)

once the payment made for bills the credit can be transfer thses accounts and utlised for payment of service tax

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
Follow

15 January 2011 Accounting Treatment of Service Tax

At the time of booking of revenue
Debit - Customer (By gross invoice amount)
Credit - Income (By amount net of service tax)
Credit - Service Tax Liability (By service tax amount)

At the time of receipt of payment from customer
Debit - Bank a/c
Credit - Customer a/c

and

Debit - Service tax liability a/c
Credit - Service Tax payable a/c

At the time of payment of service tax
Debit - Service Tax Payable a/c
Credit - Bank a/c or service tax credit a/c

Upgrade to CAclubindia Pro. Subscribe Now!