I have a qurery regarding Audit Fee provision entry.
i made this entry dated on 31/03/2012
1) Audit Fee Dr (Exp) Rs. 84270 (75000+ST 12.36%)
To Audit Fee payable (Provision) Rs 75843
To TDS Payable Rr 8427
Please expert only
24 Replies
Jay Prakash Mishra
(Article Assistant)
(84 Points)
Replied 31 May 2012
It will be better if anyone explain it in detail
Giridhar S Karandikar
(Team Lead)
(7548 Points)
Replied 31 May 2012
the total Audit Fee including ST is the expense incurred by the co, hence the gross amount is charged to P&L.
Now out of this total amt, as TDS is applicable on it 10% of it will go the govt & remaining 90% will be paid to the Auditor.
So while taking the same to the B/s 10% will be shown as TDS payable & remaining 90% will be shown as o/s to the Auditor's laibility A/c whihc whill be paid in the subsesquent year..
Pavan Kumar
(Audit Executive)
(36 Points)
Replied 31 May 2012
I think instead of booking entire amount as Audit Fee, its better to recognise Audit Fee and Service Tax separately, so as to ensure better disclosure
suggested entry is
Audit Fee (Professional Charges) A/c dr
Service Tax (Rates & Taxes / Duties & Taxes)
To Audit Fee Payable A/c
To Tds Payable
In this scenario also, entire amount is booked as expense i P& L A/c, but under different groupings
Jai Kukreja
(Finance & Tax Professional)
(83 Points)
Replied 31 May 2012
Hi,
Firstly you need to identify weather you can avail Service Tax or not. There would be 2 cases
CASE 1 : Where you can avail Service Tax
Audit Fee (Expense) A/c Dr
Service Tax Available Provision (Asset A/c) Dr
To Audit Fee Payable (Liability) A/c
To Tds Payable 194J (prof/tech) (Liabilty) A/c
CASE 2 : Where you can not avail Service Tax
Audit Fee (Expense) A/c Dr
Service Tax (Rates & Taxes Expenses A/c) Dr
To Audit Fee Payable (Liability) A/c
To Tds Payable 194J (prof/tech) (Liabilty) A/c
For any further assistance pls feel free to cantact
Pavan Kumar
(Audit Executive)
(36 Points)
Replied 31 May 2012
thanks jai
for a better and deeper explanation
akash gupta
(article)
(132 Points)
Replied 31 May 2012
jai kukreja is right in all respect ...well done keep it up
Jai Kukreja
(Finance & Tax Professional)
(83 Points)
Replied 31 May 2012
Thanks Akash
Thanks every one
Sanjay Chauhan (IFRS)
(IFRS)
(2714 Points)
Replied 01 June 2012
In case 2, where service tax is no cenvatable, it should be debited in the same account where the relative service is debited.
Take an example of fixed assets. If the cenvat (indirect taxes) billed are not cenvatbale, they are debited to the cost of asset.
Similarly, in case of purchase of Goods. If the sales tax is not cenvatable. purchase account is debited inclusive of taxes.
Conclusion:
Audit Fee (Expense) A/c Dr
To Audit Fee Payable (Liability) A/c
To Tds Payable 194J (prof/tech) (Liabilty) A/c
Nisha Yadav
(Accounts exe)
(455 Points)
Replied 01 June 2012
i want to avail service tax input so let me know.....can we do provision for service tax...
Sanjay Chauhan (IFRS)
(IFRS)
(2714 Points)
Replied 01 June 2012
If you want to avail input credit, then debit service tax portion in cenvatbale account of balance sheet.
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