Provision of audit fee whether tds is deductible

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 May 2012 Dear Sir,

I have doubt regarding one entry:
Suppose a CA firm is auditor of a Co. Now at the year end company wants to make provision for audit fee of Rs 50,000.

My question is:

1) Whether service tax will include to make the provision 50,000+6180= 56180
If yes what entry co. should pass

2) On what amount TDS will be deducted?
whther it is on Rs. 56180 or 50,000

What entry Co. should make...

Pls revert and guide,

Thanks in advance

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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14 May 2012 1. The provision should be made for audit fees + service tax.

Entry:

Audit Fees A/c Dr
To Prov for Audit Fees

2. TDS shall be deducted on the total amount including service tax.

Entry:
Prov for Audit Fees A/c Dr
To TDS Payable on Professional

Querist : Anonymous

Querist : Anonymous (Querist)

14 May 2012 Dear Siddhartha Ji,

Thanks a lot...
one more thing since service tax will be available for CENVAT credit then how can we book audit fee including service tax as an expenditure ...
May be I am wrong pls clerify......

Thanks again......

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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14 May 2012 Credit of service tax can be taken only when the invoice is received. So you will be eligible to claim credit of service tax only when you receive the invoice.

In such a case, it is better to make the provision without considering service tax.

Querist : Anonymous

Querist : Anonymous (Querist)

14 May 2012 Dear Sir,

Means we have to deduct TDS on amount excluding service tax............

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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15 May 2012 You have to deduct TDS on the amount of provision created.

If the provision is including service tax, deduct TDS on the total amount (which will be including service tax)

If the provision is excluding service tax, then also TDS will be deducted on the total amount (which will be excluding service tax)