Accounting for provision of service tax receivable

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 July 2012 we have create a provision of legal expense of Rs. 1000000+S.Tax(123600)=1123600 and we have not made any service tax receivable entry in the books of accounts as on 31.03.2012. we have passed the entry as Legal exp to Expense Payable. Whether we are eligible to Take Service Tax Receivable Credit as on 01.04.2012. Plese Confirm the Accounting treatment of such Expense.

CA Lokesh Pokharna

CA Lokesh Pokharna (Expert)
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11 July 2012 i think your main query is that you are not sure about whethere you are eligible for service tax credit or not????
accounting treatment is simple
1)if service tax credit avbl-
legal exp.10lac
service tax recievable 1.236 lac
To xyz a/c 11.236 lac
2) if credit not avbl-
legal exp 11.236
to xyz a/c 11.236

credit availibilty depends on your business if you are using these services in your mfg or service business than you are eligible ...

Querist : Anonymous

Querist : Anonymous (Querist)

11 July 2012 Hey , my query is At the end of the year 31.03.2012 shall we debited the legal exp a/c by Rs. 1123600 or by 10,00,000 ( I.e excluding service tax )I will explain the same with journal entry as below mentioned please which one is write as per AS

ExP a/C dr 11,23,600
To exp payable 11,23,600

or

ExP a/C dR 10,00,000
Service Tax Receivable Dr 1,23,600
To exp payable 11,23,600

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