Save Rs 499 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

Which accounting method to follow ?

Service Tax (Legacy) 1386 views 4 replies

Mohan

Audit Assisstant & Accounts Manager

489 Points Posted on 16 May 2012

Hi all,

The service tax has become applicable on accrual basis since Oct. 2011 with few services being exception. My query is whether are all those service providers who are supposed to pay service tax on accrual basis need to maintain books as per mercantile method ? For other than companies, it is really a confusing situation because many assessee's follow cash method-particularly professionals other that covered in exceptions as per amendments in Nov/Dec 2011-but have to pay service tax on accrual basis.

Does this amendment in service tax hints at maintaining books on mercantile basis ?

Thanks

Replies (4)

Giridhar S Karandikar

Team Lead

7558 Points Posted on 16 May 2012

As the co is following mercantile system of accounting, therefore ST shud also be accrued. however the dedn for tax purpose wud be on pymt basis only

Mohan

Audit Assisstant & Accounts Manager

489 Points Posted on 16 May 2012

Thanks Mr.Giridhar for reply, but my query was which method of accounting, a professional service provider e.g. arcitect, is suppose to follow after the amendment, whether cash or mercantile ?

Prasad

Sr. Manager

617 Points Posted on 17 May 2012

you need to follow Mercantile system

RAVITOSH KUMAR

Executive

324 Points Posted on 17 May 2012

in case of company accrual accounting system is mandatory, but others may follow cash basis of accounting. for Service tax need to follow POT rules2011. So if you maintain cash accounting system then record transactions of service tax on cash basis