17 November 2010
Experts, If I have availed maintenance services but bill is not received on the last day of the month. Services 22000 Ser. Tax 2200 EC @ 3% on ST. 1)How to make provision while making monthly P/L and BS? 2) Shld this entry be reversed in the following month? 3) Shld this service tax considered while working the monthly service tax liability to be deposited by 5th of the following month?
17 November 2010
You may adopt suitable method for preparing internal records but such type of reversals will create unnecessary harrasment. Better you give its effect separately.
In my opinion Service Tax Credit will be available only when you would have made payment to the service provider.
17 November 2010
Swetha, Service tax is destination based tax. The availment of ST is on payment made to the vendor. 1.Genetally in MNC where monthly books are closed & prepare the P&L BS etc., they follow the procedure of passing a provision of known expenses. 2.Yes the entry is reverded in the next month when you book the actual entry. The reversal is to give nulify for the previous provision entry. 3.You cannot take credit based on the provision entry. ACTUALLY SERVICE TAX CREDIT IS AVAILABLE ONLY ON PAYMENT BASIS.
Eg.AMC bills dated 01.10.2010 for Rs.100000+10300=110300 is accounted on 01.10.2010, but the payment is made on 01.01.2011, then credit is available for the month of jan 2011. I hope you are clear.
When you receive the bill, First reverse the previous months entry & then only you can pass the actual bill amount So Debit vendor Rs 24266 Credit maintenceRs24266
Since this is provisional entry the amount may also vary depending upon the actual invoice.
Debit maintenance Rs.22000 Debit Input ST Rs.2266 Credit Vendot Rs.24266
Input ST may be claimed in the month of payment to Vendor.
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