accounting for service tax

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This query is : Resolved

Sheetal Kapoor (Querist)

09 March 2011 Being a Real Estate developer and we deals in selling residential flats to our clients.
Payment are made due to customers as per opted payment plans in several instalments.
And we receive payments against the due instalments.

Below mentioned is the accounting treatment of service tax adopted by us for charging amount of Instalment form our customer.

Jan 2011
Say, at the time, due instalment is 10%:
Dr. Customer a/c (under Sundry Debtor group) Rs.110.30

Cr. Booking Amount a/c (under Direct Income group) Rs. 100.00
Cr. Service tax payable (under Duties & taxes) Rs. 10.30

Jan 2011
At the time of receiving of Payment:
e.g. customer pays 5%
Bank A/c Dr Rs. 50
Customer A/c Cr Rs. 50

Feb 2011
At the time of receiving of Payment:
e.g. customer pays 5%
Bank A/c Dr Rs. 60.30
Customer A/c Cr Rs. 60.30

Please advise
• If above txn’s are the correct way to be followed as per Service Tax Rules and accounting norms.
• When is the Service Tax Liability due
(A) Jan Rs. 10.30 (full at the time of instalment made due)
Or
(B) Jan Rs. 50 / 1.103 * .103 & Feb Rs. 60.30 / 1.103 * .103 (proportionately based on the realisations)
Or
(C) Feb Rs. 10.30 (as per actual realisation of the service tax)

CA Unnikrishnan Nair N

CA Unnikrishnan Nair N (Expert)

09 March 2011 Until 31-03-2011 service tax is payable on receipt basis. ie. pay tax when you receive payment. Accounting entries under accrual system is not relevant.

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