CENVET Credit

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PRAVEEN BHATT (Querist)
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05 May 2009 Dear all,

i want to ask,is the cenvet credit is treated as indirect income for a business or it will goes to loan & advances, i need solution for closing of my co. balance sheet.

we are a eng. manufecturing co., pls let me know what would be the accounting treatment explain with journel entry

thanks

jasmine

jasmine (Expert)
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05 May 2009 The Institute of Chartered Accountants of India has issued Guidance Note on CENVAT credit in year 2000.
The accounts are therefore to be prepared in accordance with the Guidance Note.

1. At the time of booking of bill of input service, debit should be given to CENVAT credit suspense account (service tax) and when the amount is actually paid to the supplier the suspense account should be transferred to CENVAT credit receivable account - service tax.
2 Service tax on output service will be debited to service tax payable account against which debit of CENVAT credit receivable account should be debited. Balance amount, if any shall be debited to service tax paid account. The entries in this accounts may be passed on monthly basis.
3 It should be kept in mind that “service tax credit receivable” account should be debited only when payment is made to input provider and not when the service is received or availed or booked in account
4 Incase of debit balance in CENVAT credit receivable account at the end of every half year, the same should be tallied with the service tax return and its annexure. Any unutilized balance at the end of the year will be shown under current assets in the financial statements. If the balance can not utilized for any reason the same should be written off.

jasmine

jasmine (Expert)
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05 May 2009 The Institute of Chartered Accountants of India has issued Guidance Note on CENVAT credit in year 2000.
The accounts are therefore to be prepared in accordance with the Guidance Note.

1. At the time of booking of bill of input service, debit should be given to CENVAT credit suspense account (service tax) and when the amount is actually paid to the supplier the suspense account should be transferred to CENVAT credit receivable account - service tax.
2. Service tax on output service will be debited to service tax payable account against which debit of CENVAT credit receivable account should be debited. Balance amount, if any shall be debited to service tax paid account. The entries in this accounts may be passed on monthly basis.
3. It should be kept in mind that “service tax credit receivable” account should be debited only when payment is made to input provider and not when the service is received or availed or booked in account
4. Incase of debit balance in CENVAT credit receivable account at the end of every half year, the same should be tallied with the service tax return and its annexure. Any unutilized balance at the end of the year will be shown under current assets in the financial statements. If the balance can not utilized for any reason the same should be written off.