SERVICE IN P & L A/C

This query is : Resolved

RAJ VERMA (Querist)
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09 June 2011 I am working in a company which engage in the business of service provider in refinery. We pay the service tax on service provided.

I want to know that whether we can show Gross Amount (basic value of service + service tax) in p & l a/c & then pass one more entry for creating service tax liabilities. Like below:-

(1) Party A/c Dr. (Gross Amt)
To Sales

(2) Service Tax A/c Dr.
To Service tax liabilities

HEAD OF SERVICE TAX A/C is sales a/c & service tax liabilities head is current liabilities.

Please guide me whether these presentation in accounts is according to the accounting practices.

Please give ref. to any guidance note etc.

CA. RAVIKUMAR

CA. RAVIKUMAR (Expert)
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09 June 2011 Yes, you are Correct in maintaining the accounts as per income tax act.
in income tax Sec 145A States that purchase , sale and inventory shall be valued by taking into account the amount of any tax, duty, cess or fee.