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Accounting entry for vat

Bhavesh (Accounts) (899 Points)

09 March 2012

How to pass the entry for the VAT if the service tax part is included in the Tax Invoice for E.g. The Tax Invoice Consists of Labour Charges Rs. 19125/- (Exclusive of Service Tax and VAT)

Add,: Service Tax @ 10.30% on 19125/- and 33% on service Tax Amt. Rs. 656/- And 8% VAT on there on i.e.

Labour Charges Rs. 19125.00

S.T. @ 10.30% & Rs. 656.00

Total Rs. 19781.00

VAT @ 8% on ab.Rs.1582.00

Total Rs.21363/-

How to account the same Whether TDS has to be deducted and which amt. has to be taken as VAT. Can anybody pls. explain in the details.

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Nirav (Accountant) (595 Points)
Replied 10 March 2012

Party A/c Dr.....21363.

To Labour Charges A/c.....19125.

To ST A/c...............................656.

To VAT A/c..............................1582.

NO TDS.

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Bhargav K (Senior Associate/Articled assistant) (40 Points)
Replied 15 March 2012

Above entry posted by Mr. Nirav is not correct. The transaction is an expense if i am not wrong entry would be :

Labour charges a/c Dr Rs.19,125

Service tax ( receivable) Dr Rs 1,970 ( 10.30% on labour charges)

VAT receivable Dr Rs. 1,687 ( 8% on Labour charges + Serv.tax)

To Party a/c Credit. Rs. 22,782

One more question is labour charges is an service how can there be VAT on services.? If there is service tax than please explain what kind of transaction is the same.

Bhavesh (Accounts) (899 Points)
Replied 15 March 2012

Above entry posted by Mr. Nirav is not correct. The transaction is an expense if i am not wrong entry would be : Labour charges a/c Dr Rs.19,125 Service tax ( receivable) Dr Rs 1,970 ( 10.30% on labour charges) VAT receivable Dr Rs. 1,687 ( 8% on Labour charges + Serv.tax) To Party a/c Credit. Rs. 22,782 One more question is labour charges is an service how can there be VAT on services.? If there is service tax than please explain what kind of transaction is the same.

Labour charged is a Contract for eg. showroom renovation expenses the VAT has been charged on labour which comes under contract.

Bhargav K (Senior Associate/Articled assistant) (40 Points)
Replied 16 March 2012

As you know to charge VAT there has to be sale of goods. And entire labour charge amount should be a sale of a good than only you can charge VAT but Labour charges are services and not goods hence no VAT should come in this transaction.

VAT if existing would be on some goods supplied in the course providing labour charges , and 8% VAT should be charged on goods only and not on the Labour charges.

Ateeq (CA - Final) (218 Points)
Replied 20 March 2012

Originally posted by : Bhavesh C. Vyas
	How to pass the entry for the VAT if the service tax part is included in the Tax Invoice for E.g. The Tax Invoice Consists of Labour Charges Rs. 19125/- (Exclusive of Service Tax and VAT) Add,: Service Tax @ 10.30% on 19125/- and 33% on service Tax Amt. Rs. 656/- And 8% VAT on there on i.e. Labour Charges Rs. 19125.00 S.T. @ 10.30% & Rs. 656.00 Total Rs. 19781.00 VAT @ 8% on ab.Rs.1582.00 Total Rs.21363/- How to account the same Whether TDS has to be deducted and which amt. has to be taken as VAT. Can anybody pls. explain in the details.