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Income tax

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This query is : Resolved

Sushma Mevacha (Querist)

29 May 2013 If A is a Private Limited Co., is constructing the Shed. Contractor "B" raised the Bill & Charged the Service Tax 50% on 40% of Taxable amount and rest 50% is payable by the receiving Co. " A".

"A" has capitalized all the Expenses for New Shed i.e. the Bill of Contractor "B" including the Service Tax Charged. Now what will be the Position of Rest 50% Service Tax paid by "A" under reverse Charge ? Is it Expense or "A" can capitalize the same. ?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

29 May 2013 Under reverse charge method what ever you are paying service tax unless you are not eligible to claim CENVAT input, the need to debit the particular expenses only, in your query construction of shed is capital nature, hence need to debit fixed asset only. also please refer accounting standard -10 for fixed asset, what ever non refundable taxes paid for purchasing fixed asset need to be capitalised

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