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Accounting for service tax refund

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Querist : Anonymous

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Querist : Anonymous (Querist)
19 June 2013 Dear Expert,

We have created a reserve for service tax refund receivable (refund application is due with the govt.). This is required as per our Company global policy. while creating a reserve we debited the expense.

But we got a refund against the above refund receivable. so from a accoutning point of view, should we credit the expense or treat it as other income.

Kindly guide on the above query
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CMA Ramesh Krishnan

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CMA Ramesh Krishnan (Expert)
29 June 2013 No. since you are eligible for refund. starting itself you need to debit the service tax receivable, not to expenses

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