Ruchika Khaneja (Article) (33 Points)
02 July 2009Respected Members,
In case a company is paying service tax on its input service and is not required to pay any service tax on its output services, then in that case how should it pass the accounting entries?
Should the service tax paid be shown as the part of the expense or it should be debited separately?
Jyoti Malik
(ACCOUNTANT)
(2644 Points)
Replied 02 July 2009
| Originally posted by :Ruchika Khaneja | ||
| " | Respected Members, In case a company is paying service tax on its input service and is not required to pay any service tax on its output services, then in that case how should it pass the accounting entries? Should the service tax paid be shown as the part of the expense or it should be debited separately? |
" |
Hi Ruchika
The total amount (incl Service Tax) shown as expenses. there is no requirement of separate entry of service tax.
Ramkrishna
(Accountant)
(325 Points)
Replied 02 July 2009
Ruchika Khaneja
(Article)
(33 Points)
Replied 03 July 2009
Thanks a ton for your response...
In our case the company has issued us the TDS Certificate with an amount paid or credited inclusive of service tax, but for us the income will not include the part of service tax paid to us by that company.
Please guide what should be the our course of action?
Ravi Agarwal
(Articled Assistant)
(27 Points)
Replied 03 July 2009
| Originally posted by :Ruchika Khaneja | ||
| " | Thanks a ton for your response... In our case the company has issued us the TDS Certificate with an amount paid or credited inclusive of service tax, but for us the income will not include the part of service tax paid to us by that company. Please guide what should be the our course of action? |
" |
TDS is deducted on the amount of the bill raised incl of service tax. There is no problem because if yous TDS exceeds your total tax liabilty for the relevant asst. year the excess will be refunded with interest.
This is as far as I know. But, being only a student, there are chances of me being mistaken. If you come to know something contrary to what i just said pls let me know....
Ruchika Khaneja
(Article)
(33 Points)
Replied 03 July 2009
Hello Ravi,
As per a circular issued by CBDT, TDS is deducted only on the amount of expenditure and not on the amount of service tax levied on the same. [ CIRCULAR NO. 4/2008, DATED 28-4-2008 ]
The problem is not in respect of excess tax deducted, it is in respect of the amount that is to be shown as income in our return. As the same will not match with the TDS Certificate.
Satish
(CA Final Student)
(479 Points)
Replied 03 July 2009
Hi Ruchika & Ravi, Circular 4/2008 is particularly issued on a query raised in respect of TDS on rent. One can construed the other sections in this line but the circular specifically talks about section 194I. So, one should not assume that the contents of circular is also applicable to other sections and hence the TDS should be made on the amount inclusive of service tax. The contradictory provisions are given in section 44AB where the turnover for tax audit purpose includes duties & taxes. Hence while calculating the turnover service tax is required to be included and then it will match with the TDS certificates.
Ruchika Khaneja
(Article)
(33 Points)
Replied 13 July 2009
Sir,
In our case Rent is received by an individual and TDS is deducted on Rent + Service Tax.
So what should be taken as Income under the head House Property - only rent or rent + service tax.
My contention is that service tax is only received on the behalf of govt and then paid to the govt., so in no case it becomes a part of our taxable income. But in such a situation Rental income will not match with the TDS Certificate.
Also there is no provision for reducing service tax or any other expense from the Income from House Property.
Please guide as to what should be taken as Income while submitting the Income Tax Return.
Satish
(CA Final Student)
(479 Points)
Replied 14 July 2009
Ruchika, the abovementioned circular contains the method of deducting tax on rent and it is clearly mentioned that the TDS shall be made only on rental part and not on service tax. The very intention of the department would be the same as you mentioned. Since rent is assessed under the head income from house property, service tax cannot be deducted as an expense. So, as far as rent is concern, TDS shuld be made only on rent on not on service tax. As such, the income chargeable to tax would be the rent only. But since this circular is specifically deals with the rent, the same provisions cannot be applied automatically to other sections of TDS.
sridhar
(accountant)
(21 Points)
Replied 18 March 2010
we are paying rent to the land lord and the service tax is calculated before tds deduction, say 100000 * 10.3% and tds is calculated on 100000/- and after deducting tds in 100000/- service tax is added ie., 100000- tds 10000 + st. 10300 = 100300/-
if in this case the service tax becomes a part of rent ie., 100000+10300 = 110300/- should i account as rent or 10300 as separate expenses as service tax on rent paid to land lord .
please guide me .
regards
sridhar
sridhar47722gmail.com
Satish
(CA Final Student)
(479 Points)
Replied 18 March 2010
Dear Sridhar,
If you can take credit of service tax paid on rent, there is not a problem for you to treat only rental part as an expense. On the contrary, if you are not availing any credit of service tax, the service tax part will be expensed out in the same head, i.e. rent. So give the suitable treatement.
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