Underwent a Audit where a people from the Service Tax department had come for survey. I noticed a interesting point where they demanded that service tax has to be paid for the amount recovered from the employee(s) for the breach of contract . Kindly guide me to account this one (entries) regarding this payment of service tax.
Thanks in advance!
if the company has reflected the "breach of contract" in income side, in P/L account, then its subject to Service tax,
however this amount is a part of salary payable but not paid,
and usually the company put this amount under welfare for working employees, to avoid litigations
but if the P/L account has reflected it as income, then ST is payable. and it wil be simply debit of service tax
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