Payment liability

This query is : Resolved

Ravi Jagetiya(CA Final) (Querist)
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27 March 2008 Sir my client has given services of advertising.
For the month of feb he has provided services of 500000.00 and accordingly created liability @ 12.36%, now since the service tax liabil;ity is not based on billed amount but on the amount received for the services rendered or to be provided. my client received only 100000.00 up to 29.02.08 so what amount he has to deposit on 5.03.08 .What will be rectification entry if he assum that it cann't recovered anymore.

Thanks in advance.

annapurna

annapurna (Expert)
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28 March 2008 The service tax is to be paid on the receipt basis. When your client has received only one lakh out of five lakh you have to deposit service tax on one lakh.
In case it is not recoverable, the entry has to be reversed if you are following the double entry system of accounting