Service tax & tds entry on prepaid expenses
This query is : Resolved
20 September 2011
Hi
Purchase of Antivirus (Computer Expenses) for next 3 years = Rs. 50000 + 5150(ST-10.3%) = 55150 (Bill amt)
TDS dedt @ 10.00% = Rs. 5000 and Paid to Govt on following month.
The payment of Rs. 50150 (55150-5000) to be payable in advance for three years.
Please send the journal entries for service tax Rs. 5150 availed and utilised for curent years and how the expenses can be book in these three years.
VINOD AGGARWAL
9810833006
Purchase of Antivirus (Computer Expenses) for next 3 years = Rs. 50000 + 5150(ST-10.3%) = 55150 (Bill amt)
TDS dedt @ 10.00% = Rs. 5000 and Paid to Govt on following month.
The payment of Rs. 50150 (55150-5000) to be payable in advance for three years.
Please send the journal entries for service tax Rs. 5150 availed and utilised for curent years and how the expenses can be book in these three years.
VINOD AGGARWAL
9810833006
20 September 2011
Software Purchases 50,000
Service Tax Input Credit A/c 5150
To Vendor 55150
( Initial Entry)
Service Tax A/c 5150
To S Tax Input Credit A/C 5150
( Availment)
Software - Amortisation 1333
To Accumulated Amortisation on Software 1333
(Yearly amortisation)
You may also charge off all the 5k to a single year considering materiality.
Service Tax Input Credit A/c 5150
To Vendor 55150
( Initial Entry)
Service Tax A/c 5150
To S Tax Input Credit A/C 5150
( Availment)
Software - Amortisation 1333
To Accumulated Amortisation on Software 1333
(Yearly amortisation)
You may also charge off all the 5k to a single year considering materiality.
26 September 2011
I believe this accounting treatment is not genuine
First of all, as per Income tax act amentment 2008 the software are asset now and required to be categorised as Computers and 60 % depreciation to be claimed and since it is purchase of software it an asset and therefore no TDS to be deducted and even the laibilty of service tax also does not arise in the afore said case.
As per Ind As 38 Intangible Assets and also current AS 26
“Some intangible assets may be contained in or on a physical substance such as a compact disc (in the case of computer software), legal documentation (in the case of a licence or patent) or film. In determining whether an asset that incorporates both intangible and tangible elements should be treated under Ind AS 16 Property, Plant and Equipment or as an intangible asset under this Standard, an entity uses judgement to assess which element is more significant. For example, computer software for a computer-controlled machine tool that cannot operate without that specific software is an integral part of the related hardware and it is treated as property, plant and equipment. The same applies to the operating system of a computer. When the software is not an integral part of the related hardware, computer software is treated as an intangible asset.”
Therefore it is an asset whether you take as tangible under Computer or Intangible, no service tax is required to be paid for the purchase of asset
and sepreciation to be claimed accordingly
Please ask for any query
First of all, as per Income tax act amentment 2008 the software are asset now and required to be categorised as Computers and 60 % depreciation to be claimed and since it is purchase of software it an asset and therefore no TDS to be deducted and even the laibilty of service tax also does not arise in the afore said case.
As per Ind As 38 Intangible Assets and also current AS 26
“Some intangible assets may be contained in or on a physical substance such as a compact disc (in the case of computer software), legal documentation (in the case of a licence or patent) or film. In determining whether an asset that incorporates both intangible and tangible elements should be treated under Ind AS 16 Property, Plant and Equipment or as an intangible asset under this Standard, an entity uses judgement to assess which element is more significant. For example, computer software for a computer-controlled machine tool that cannot operate without that specific software is an integral part of the related hardware and it is treated as property, plant and equipment. The same applies to the operating system of a computer. When the software is not an integral part of the related hardware, computer software is treated as an intangible asset.”
Therefore it is an asset whether you take as tangible under Computer or Intangible, no service tax is required to be paid for the purchase of asset
and sepreciation to be claimed accordingly
Please ask for any query
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- REGARDING GST ON COMMERICIAL PROPERTY
- Is this income indian or foreign income?
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- GST on export of services and Input Credit
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- TDS U/S. 194NF
- ITC temporary reversal and reclaim
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- Applicable TDS rate for sale of property in Nov 2024
- Donation Receipt u/s 80G
- MIS MATCH OF INVOICE NUMBER
- VERIFICATION OF REFUND RELATED
- GST Regis.
- ITC c/f from FY2022-23 to FY2023-24 entered the same in table 8C of GSTR9 of FY 2022-23, in FY23-24
- Late filling fees Demand by gst office
- IGST Credit-Show cause notice issued-confusion
- Short and Excess provision of expenses
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
Trending Online Classes
CAclubindia
