gupta (Accountant) (305 Points)
27 November 2015Dear All
Can you give an idea what will be the entries in Tally in case of RCM of the following case :-
We got Security Service charges bill for Rs.10000/- and they have not charged any ST in their bill.Now we have to deposit ST on their behalf.
Please mention the entries step by step.
Thanks in advance
.Regards
Jayanta
CA jignesh daiya
(CA )
(447 Points)
Replied 27 November 2015
TAXATION POINT:-
SECURITY SERVICE CHARGE IS COVER BY 100% REVERCE CHARGE HENCE IN THIS CASE SERVICE RECEIVER IS LIABLE TO PAY SERVICE TAX
AS PER RULE 7 OF POINT OF TAXATION IN THIS CASE IS DATE OF PAYEMENT IF PAYEMENT MADE WITHIN 3 MONTH OF INVOICE DATE ELSE NEXT DAY AFTER COMPLETION OF 3 MONTH
AS PER CENVAT PROVISON, SERVICE RECIVER IS ELIGIBLE TO TAKE CENVAT CREDIT ON TIME OF APYEMENT OF SERVICE TAX IRRESPECTIVE OF PAYEMENT TO SERVICE PROVIDER
ACCOUNTING ENTRY
AT THE TIME OF RECEIPT OF INVOICE
SECURITY SERVICE A/C ......DR
TO SERVICE PROVIDER A/C
TO SERVICE TAX PAYABLE A/C
AT THE TIME OF PAYEMENT TO SERVICE PROVIDER IF WITHIN 3 MONTH OF INVOICE
SERVICE PROVIDER A/C ;;;DR
TO BANK A/C
AT THE TIME OF MAKING PAYEMENT OF SERVICE TAX AS PER RULE 7 OF POT RULES
SERVICE TAX PAYABLE A/C.....DR
TO BANK A/C
AT THE TIME OF TAKING CENVAT CREDIT
CENVAT CREDIT RECEIVED A/C..DR
TO SERVICE TAX A/C
CA jignesh daiya
(CA )
(447 Points)
Replied 27 November 2015
TAXATION POINT:-
SECURITY SERVICE CHARGE IS COVER BY 100% REVERCE CHARGE HENCE IN THIS CASE SERVICE RECEIVER IS LIABLE TO PAY SERVICE TAX
AS PER RULE 7 OF POINT OF TAXATION IN THIS CASE IS DATE OF PAYEMENT IF PAYEMENT MADE WITHIN 3 MONTH OF INVOICE DATE ELSE NEXT DAY AFTER COMPLETION OF 3 MONTH
AS PER CENVAT PROVISON, SERVICE RECIVER IS ELIGIBLE TO TAKE CENVAT CREDIT ON TIME OF APYEMENT OF SERVICE TAX IRRESPECTIVE OF PAYEMENT TO SERVICE PROVIDER
ACCOUNTING ENTRY
AT THE TIME OF RECEIPT OF INVOICE
SECURITY SERVICE A/C ......DR
TO SERVICE PROVIDER A/C
TO SERVICE TAX PAYABLE A/C
AT THE TIME OF PAYEMENT TO SERVICE PROVIDER IF WITHIN 3 MONTH OF INVOICE
SERVICE PROVIDER A/C ;;;DR
TO BANK A/C
AT THE TIME OF MAKING PAYEMENT OF SERVICE TAX AS PER RULE 7 OF POT RULES
SERVICE TAX PAYABLE A/C.....DR
TO BANK A/C
AT THE TIME OF TAKING CENVAT CREDIT
CENVAT CREDIT RECEIVED A/C..DR
TO SERVICE TAX A/C
Manikanth
(Chartered Accountant)
(342 Points)
Replied 27 November 2015
1)
Security Service A/c Dr 10,000 (under Indirect Expenses)
Service tax input but not due a/c Dr 1,250 (current asset)
To Party a/c 10,000 (Creditor)
To Service tax Payable a/c 1,250 (Current Liability)
(Being Security Services availed due for payment and ST thereon is payable by RCM)
2)
Party A/c Dr 10,000
To Bank A/c 10,000
(Being payment made to party)
3) Service tax Payable A/c Dr 1250
To Bank A/c 1250
(Being ST Paid)
4) Service tax input A/c Dr 1250 (under Current asset)
To Service tax input but not due a/c 1250
(Being ST will be availed by service recepient only after the payment of ST under RCM)
Manikanth
(Chartered Accountant)
(342 Points)
Replied 27 November 2015
If Payment is made within 3 months from the date of Invoice, then ST paid under RCM by Service receiver will be eligible for Cenvat Credit,
Otherwise no Cenvat credit can be availed, So, entry no. 4 will not be made.
CA jignesh daiya
(CA )
(447 Points)
Replied 27 November 2015
PLEASE GIVE REFERENCE FOR CONDITION OF CENVAT CREDIT YOU HAVE STATED IN ABOVE POINT
CA jignesh daiya
(CA )
(447 Points)
Replied 27 November 2015
PLEASE GIVE REFERENCE FOR CONDITION OF CENVAT CREDIT YOU HAVE STATED IN ABOVE POINT
gupta
(Accountant)
(305 Points)
Replied 27 November 2015
Sir
Thanks for your prompt reply.
The 4th entry portion I have some confusion :
What is Service tax input but not due a/c: - In Tally under which it will come and how this account will be square off.
We are depositing Service Tax on quarterly basis as our concern is a proprietor ship business.
Waiting for your reply
Jayanta
jaimin patel
(n.a)
(24 Points)
Replied 27 November 2015
DR SECURITY EXP
DR S.TAX PENDING CREDIT(RCM)
CR SERVICE PROVIDER
CR TDS ON CONTRACTOR 94C
CR S.TAX ON MANPOWER SUPPLY SERVICE(RCM)
gupta
(Accountant)
(305 Points)
Replied 27 November 2015
Dear Manikant Ji
Waiting for your clarification.
Please give reply.
Regards
Jayanta
Manikanth
(Chartered Accountant)
(342 Points)
Replied 28 November 2015
Service Tax Input but not due a/c will come under the head Current asset.
As you have made the payment to the concerned party, the liability for the payment of Service Tax has arisen. So till you make payment of ST to dept under RCM, you are not eligible for the Input tax Credit of Service Tax. Therefore a new ledger to be created with the name “Service Tax Input but not due”.
When you made payment of ST, then you are eligible for Input tax credit, then the entry will be
Service Tax Input a/c Dr
To Service tax input credit but not due a/c
With this entry "Service tax input credit but not due a/c" is nullified.
naveena k c
(Accounts Assistance)
(27 Points)
Replied 11 April 2017
Dear Sir,
first we shoud pass the following entry for RCM
1. Dr security charges (expenses) 100
Dr Reverse Charge input account 14
Cr service provider (party/vendor Name) 99
Cr TDS on Contractor 1
Cr RCM Payable 14.
2. Dr Service Provider/Party account 99
Cr Cash/Bank Account 99.
3. Dr RCM Payable 14
Cr Cash/Bank Account 14.
after RCM Paid we have to take input for that.
4. Dr Service Tax Input Account 14
Cr Reverse Charges Inout Account 14.
Thanks
pardeepkumar
(M.Com)
(35 Points)
Replied 07 September 2017
I want to ask : Suppose normal net tax liability for a month 10000/- and bills received on which tax tobe calculated under RCM suppose 2500/- for the same month, now what we amount we have to deposited under which heads, kindly clarify.
thanks in advance
pardeep
CAclubindia
