01 November 2007
if i am following mercantile method of accounting, the gross receipts credited to P/L A/c includes service tax yet to receive and as such the service tax liability appears on the liability side for payment to Govt. Now whn computing income tax why shall we disallow service tax appearing as liability in the B/S u/s 43B, whn the seller is yet to realise the amt frm the buyer. pls answer.
02 November 2007
Service tax is part of turnover ....like sales tax . By crediting service tax to service tax payable account , you have infact reduced turover to that extent . Which means in fact you have claimed deduction for service tax . But the same is not yet paid .
03 November 2007
Sir, If I show the service tax as a liability then the ITO will ask if its paid before 31st may or not and if not will disallow it U/S 43B.My question is if i have not realised the service tax amt from the buyer how can i,being the seller, deposit it to the authority.pls clarify
04 November 2007
As per mercantiel system of accounting you have to account the income and expenditure whether acutally you received/paid it or not.Will you say that,i have not received the amount for sale so i have not accounted that amount when u are follwing mercantile system.Like that service tax also a turnover hence you have to pay it before filing return or before May.Otherwise it will be disallowed.
12 November 2007
You have to maintain separate account service tax charged (ie the ST amount not collected) the same which need not be disallowed. But whatever the amount collected from the respective customers you have to pay with in the due date. For service tax charged ITO will not question regarding this.