20 November 2008
Query:-If I am purchasing some Machinery & pay freight for that machinery Rs.50000/- Is their any liability to deduct TDS from freight payment,& pay service tax, if I capatilize this Expenses?????
20 November 2008
you have two options prashant: 1. directly debit the machinery account by the amount of freight and service tax thereon if you are not claimint the cenvat thereof. entry will be: Machinery a/c dr. (value+freight+s.tax) To supplier a/c Value To transporter a/c Freight To s.tax payable a/c S.tax (this is a combine entry you can pass separate entry also)
2. another option is to transfer the freight expenses account opened by mr. ram avtar to machinery a/c. entry will be: Machinery a/c dr. Freight to cartage exp. a/c
further you should also transfer the service tax exp. to the machinery a/c by same entry if you are not taking the cenvat credit of the same.
20 November 2008
1. Can I Capatalize Service Tax Paid on Freight? 2. If I Capatalize Installation Charges,should I CApatalize Installation Charges + Service Tax on Installation Charged by Vendor in Separate bill for Installation??????
20 November 2008
I concur with the view expressed by Sri Zeeshan. If there is no scope for claiming Cenvat credit, then you have to capitalise Service Tax component also.
Whether a combined bill is obtained or two seperate bills for Installation Charges and Service TAx are obtained makes no difference.
Decision is based not on number of documents but on principle
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