Accounting entry of Service tax

Dear Punit,

The liability of serivce tax is in the hands of the serivce recipient. The service tax liability will have to be paid on all the transportations ie inward as well as outward.

However, for taking input tax credit, you would be eligible to take the credit of service tax paid on inward transportation only. The service tax paid on outward transportation (your case of transportation arranged to your customer) would not be eligible for input tax credit and needs to be treated as an expense.

Trust clarifies

Hari

DEAR SIR

HOW TO PASS THE ENTRY OF TDS DEDUCTED ON SERVICE TAX

Dear Jeetu,

You as a service receiver has to pay service tax on the amount of transportation charges paid whether inward transportation or outward transportation.

You can avail Service tax paid under GTA for inward transportation as cenvat credit but not service tax paid on outward transportation.

The entry needs to be passed as follows :

At the time of booking of expense :

1. Expense A/c ---------------------------------------------------------Dr. (amount inclusive of service Tax)

                            TO transporter A/c (Amount inclusive of service tax on GTA)

At the time of payment to transporter (For inward transportation bills)

2. Transporter A/c-----------------------------------------------------Dr. (Amount Excl service Tax)

cenvat A/c ---------------------------------------------------------------Dr.

                            To Bank A/c (Amount as per consignment note or invoice excl service tax)

                             To GTA A/c (Service tax on GTA amount)

                             To Expenses A/c (Cenvat Amount)

At the time of payment to transporter (For outward transportation bills)

2. Transporter A/c-----------------------------------------------------Dr. (Amount Excl service Tax)

                            To Bank A/c (Amount as per consignment note or invoice excl service tax)

                             To GTA A/c (Service tax on GTA amount)

Hope This solves ur query.

Thanks and Regards,

Manoj B. Gavali