Sonika (AM - Fin) (34 Points)
02 April 2010While creating provision for Statutory Audit Fee in the books, what will be the treatment of Service Tax leviable on Audit Fee.
Can cenvat credit be booked even if only a Provision is being booked & not a liability.
Also,can the provision be credited to related party account or it is to be booked under Provision for Expenses.
VINEET
(learner)
(53 Points)
Replied 02 April 2010
you can book the cenvat credit in u r book by the name of called deffered service tax Aic. in that case u will pass entry as follows
audit fee A/c dr. 110.3
to audit fee payable 100
to deff, service tax A/c 10.3
and the same will be allowed to take cenvat credit
As per Cenvat credit rules credit is to be taken when payment made to the party not before the payment. therefore in this case you can not take credit of Cenvat.
In my opinion expenses are booked in respective head because auditors are appointed in AGM and also fees are fixed in that meeting
CA PRAVEEN MIGLANI
(Deputy Manager)
(26 Points)
Replied 09 April 2010
Kunal is absolutely right, as the cenvat credit can be obtained only after the actual payment of the amount (including service tax) to the service provider and in case of provisions the service tax cenvat credit can not be claimed immediately.
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