journal entry for ser tax

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jinesh

jinesh (Querist)
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15 October 2008 Hello,

i want to know about service tax setoff against excise availed journal entry
explain the jv

Zeeshan

Zeeshan (Expert)
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15 October 2008 JOURNAL ENTRIES
1. when you have purchased some creditable goods:

Goods account Dr.
Excise duty recievable A/c Dr.
To Supplier's A/c

Note: in this entry we are not recording the duty as expenses but we are debiting as our assets ie recievable account. this is called availment of excise duty credit.

2. When you are billing to customer for services given and service tax:

Customer's A/c Dr.
To Sales account
To Service Tax payable A/c

Note: in this entry at the time of recording of sales we are creating a liability of service tax which is to be payable to the government as we have collected the same from the customers.

3. When you are setting off the liability with the credit availed in point no.1:

Service tax payable a/c Dr.
To Excise Duty recievable a/c

Note: in the last step we have set off one liability against one assets. service tax is our liability which is payable to the government and excise duty credit or service tax credit is just like advance duty paid to govt. of which we are claiming the credit.

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