input tax credit

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geeta

geeta (Querist)
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15 January 2011 how to do the accounting treating of input tax credit in services?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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15 January 2011 Input credit need to take on payment basis( after making payment for the bill)

you can create 2 different account for each credit

1. Cenvat -Service tax (Interim)
2. Cenvat- Education cess (Interim)
3. Cenvat- SHE Cess (Interim)

these 3 accounts can be used while taking credit & create follwoing

1. Cenvat -Service tax (Final)
2. Cenvat- Education cess (Final)
3. Cenvat- SHE Cess (Final)

once the payment made for bills the credit can be transfer thses accounts and utlised for payment of service tax

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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15 January 2011 Accounting Treatment of Service Tax

At the time of booking of revenue
Debit - Customer (By gross invoice amount)
Credit - Income (By amount net of service tax)
Credit - Service Tax Liability (By service tax amount)

At the time of receipt of payment from customer
Debit - Bank a/c
Credit - Customer a/c

and

Debit - Service tax liability a/c
Credit - Service Tax payable a/c

At the time of payment of service tax
Debit - Service Tax Payable a/c
Credit - Bank a/c or service tax credit a/c

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