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Accounting treatment

MANISH CHANDRA (Student CA Final ) (26 Points)

26 July 2014

Professionals please provide the accounting treatment to book this expenses, considering time period. If assessee is eligible for cenvat credit and assessee is not eligible for cenvat credit.

professional charge amt. 100000
service tax amt. 10000
TDS is to be deducted 10000

professional charges time period from january 2014 to june 2014.

When the effect of TDS to be shown mean either at the time of booking invoice or at the time of making payments. please reply soon as soon as possible. thanks in advance.

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6 Replies

CA Saloni (Manager-Accounts & GST Consultant) (5124 Points)
Replied 26 July 2014

IN CASE OF CREDIT NOT TO B TAKEN

Legal & professional Expenses_dr 110000

To tds payable 10000

To vendor 100000

(assuming bill is of 110000/- fees+ ST)

1 Like

MANISH CHANDRA (Student CA Final ) (26 Points)
Replied 26 July 2014

Thanks to reply but what abt time period. cause books of a/c are to be clsoed on 31/3/2014.

and this invoice is for period jan 2014 to june 2014.

Nikhil Kaushik (Fellow CA) (85053 Points)
Replied 31 July 2014

Dear Mark,

As such yes, it is tax audit case. If you omit reporting of F&O transactions, you carry risk of getting future tax liabilities as your case might get picked up in AIR.

Please note that getting audit done is beneficial as you to carry forward the losses which can be used to reduce future tax liabilities in case you make gains in subsequent years.

CA PALLAVI VOHRA (Learner) (140 Points)
Replied 31 July 2014

Hello Manish,

Please provide the following details:

1. Date of invioce of professional

2. Date of payment

CA PALLAVI VOHRA (Learner) (140 Points)
Replied 31 July 2014

Manish please note:

1.As per Section 194J TDS on professional fees shall be deducted at the time of actual payment of such fees or its credit to the account of the payee.

2. As per sub rule (7) of Rule 4 of Cenvat credit Rules, 2004, the CENVAT credit on input service shall be allowed on or after the day on which payment is made of the value of input service and service tax paid or payable as indicated in the invoice.

If no payment has been made till June 30th, entries should be passed as under:

On 31/3/2014 and 30/06/2014:

Professional charges Dr. 50000

Cenvat credit Not Yet Availble Dr.5000

To Professional Service provider A/c 50000

To TDS payable A/c 5000

when payment is made to the service provider entry should be passed as under:

Cenvat credit availble for set off Dr. 5000 (or 10000 as the case may be)

To cenvat credit not yet available a/c 5000(or 10000 as the case may be)