How to pass service tax entry?

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 July 2012 Hello sir,
Recently we hve opened a Pvt Ltd Co., I am one of the partner and accountant too for this co., My question is:-
We have rendered IT service to the one of the University. Work is completed and they are asking for Invoice for providing service to release the bill amount. How we have to pass the entry relating to the invoice amount, service tax and party a/c in Tally ERP-9.? Plz explain me in detail.

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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25 July 2012 1)At the time of raising of Invoice:

Debit to the party account with total amount including service tax amount and credit to the service fees account with the service fee and credit to the service tax account with the service tax amount

2) At the time of receipt of amount from the party

Debit to the cash/bank account and credit to the party account with amount received

3) At the time of payment of service tax i.e remittance to the Government

Debit to the Service tax account and credit to the cash/bank account with the amount of payment.

Let now i pass entries with an example.

Assume party is X. Service provided is IT service For Rs.10,000 + Service tax.

Now Pass the entries:

1) At the time of invoice raised

X a/c dr 11236
To IT Service a/c 10000
To Service tax a/c 1236
(Being IT service provided to the customer X and the fee charged receivable and Service tax receivable)

2) At the time of amount received from the party

Cash/Bank a/c dr 11236
To X a/c 11236

3) At the time of Service tax remitted to the Govt.

Service tax a/c dr 1236
To Cash/Bank a/c 1236

Note: Here X a/c grouped under SUNDRY DEBTORS; IT Service a/c grouped under INCOME HEAD which is creditable to the profit and loss account and Service tax a/c grouped under CURRENT LIABILITES.

Note: Here i take IT Service a/c just for your example you may tax fee collected account as you want i.e like IT service fee a/c or fees a/c or professional fees a/c etc... what may be you want for your easy understanding.

OM SAI SRI SAI JAI JAI SAI

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