Service Tax entries
This query is : Resolved
27 March 2009
please explain me about the types of accounts to be maintain in case of service tax and service tax inword credit
and how entries to be passed in this accounts,please solve this query
and how entries to be passed in this accounts,please solve this query
27 March 2009
Maintain input service tax and out put service tax.
when raise the bill
Debtor
to service income
to Output service tax
When you receive the bill from your supplier of service
Expenditure
Input sercvice tax
To creditor
On setting off
OUt put service tax
To input service tax
(maximum of out put service tax)
If output serivce tax is still shows credit then you have to pay to the department.
If input service tax shows debit balance after this entry then that is refundable or it should be carried over to next month for set off.
when raise the bill
Debtor
to service income
to Output service tax
When you receive the bill from your supplier of service
Expenditure
Input sercvice tax
To creditor
On setting off
OUt put service tax
To input service tax
(maximum of out put service tax)
If output serivce tax is still shows credit then you have to pay to the department.
If input service tax shows debit balance after this entry then that is refundable or it should be carried over to next month for set off.
27 March 2009
Basically two accounts to be maintained
1. Service Tax a/c
2. Service tax Credit a/c
You can directly book your exp. to service tax and get credit to service tax credit a/c. Once you got all the credit "ST credit a/c" will be Nil.
1. Service Tax a/c
2. Service tax Credit a/c
You can directly book your exp. to service tax and get credit to service tax credit a/c. Once you got all the credit "ST credit a/c" will be Nil.
27 March 2009
Service tax Credit is received once you pay for services, Hence if you need to create three account.
1. Service Tax Payble Account-Current Liability
2. Service Tax Credit-Receivable-Current Asset
3.Service Tax Credit-Received-Current Asset.
So when u book entry, then first transfer the Credit to receivable account & once final payment is made against this serives bill then shift the entry from receivable to received, this is beacause service tax credit is reeived only on payment basis. & not on accrued basis.
1. Service Tax Payble Account-Current Liability
2. Service Tax Credit-Receivable-Current Asset
3.Service Tax Credit-Received-Current Asset.
So when u book entry, then first transfer the Credit to receivable account & once final payment is made against this serives bill then shift the entry from receivable to received, this is beacause service tax credit is reeived only on payment basis. & not on accrued basis.
27 March 2009
The Payment of Service Tax to the Central Govt. is based on the collection of the same from the debtors.Further the Input Credit is also based on the actual Payment Basis.Therefore,the entries should be made in such a that both accrual & actual position could be known.
Accordingly in my opinion following Entries is required to be Passed for accounting the service Tax .
1.At the time of the Raising of the Invoice :
Debtors Account Dr.....xxxx
To Income Account xxxx
To Service Tax - Output Account xxxx
(Being Invoice Raised on the debtor)
2.At the Time of actual receipt of full or part receivable from the Debtor.
Bank Account Dr.....XXXX
TDS Account Dr.....XXXX
Service Tax -Output Acc Dr.....XXXX
To Debtors Account xxxxx
To Service Tax Payable A/c xxxxx
(Being Collection from the Debtor)
3.At the time of receiving the invoice from the Vendor :
Expenses Account Dr.....xxxx
Service Tax - Input A/c Dr.....xxxx
To Vendors Account xxxxx
4.At the time of making actual or Partial Payment to the Vendor.
Vendor Account Dr....xxxx
Service Tax Payable A/c Dr....xxxx
To TDS Account xxxx
To Service TAX - Input Account xxxx
To Bank Account xxxx
(Being Payment made to the Vendor)
At this Point of time the Service Tax Payable Account Shows the actual amount Payable to Central Govt after set off of Input Service Tax.
The Service Tax Output Account & Service TAX input Account will have balance as per the receipt from the debtor & payment to creditors.
Accordingly in my opinion following Entries is required to be Passed for accounting the service Tax .
1.At the time of the Raising of the Invoice :
Debtors Account Dr.....xxxx
To Income Account xxxx
To Service Tax - Output Account xxxx
(Being Invoice Raised on the debtor)
2.At the Time of actual receipt of full or part receivable from the Debtor.
Bank Account Dr.....XXXX
TDS Account Dr.....XXXX
Service Tax -Output Acc Dr.....XXXX
To Debtors Account xxxxx
To Service Tax Payable A/c xxxxx
(Being Collection from the Debtor)
3.At the time of receiving the invoice from the Vendor :
Expenses Account Dr.....xxxx
Service Tax - Input A/c Dr.....xxxx
To Vendors Account xxxxx
4.At the time of making actual or Partial Payment to the Vendor.
Vendor Account Dr....xxxx
Service Tax Payable A/c Dr....xxxx
To TDS Account xxxx
To Service TAX - Input Account xxxx
To Bank Account xxxx
(Being Payment made to the Vendor)
At this Point of time the Service Tax Payable Account Shows the actual amount Payable to Central Govt after set off of Input Service Tax.
The Service Tax Output Account & Service TAX input Account will have balance as per the receipt from the debtor & payment to creditors.
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