Reversal charges mechanism in service tax

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rahul vasant deshmukh (Querist)
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05 December 2012 Hi Friends, please suggest me regarding entries in books of service provider and service receiver in case of reversal charges mechanism.

CA Ravi Kumar Murugesh

CA Ravi Kumar Murugesh (Expert)
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05 December 2012 In the books of service provider (in case of reverse charge mechanism):
No entry (if 100% payable by service receiver)
If partly by service provider and partly by service receiver then,
Debit: Bank (collected amount)
Credit: service tax liability
upon payment to govt:
Debit: service tax liability
Credit:Bank

In the books of service receiver (in case of reverse charge mechanism)
Debit : service tax cenvat credit (Current asset)
Credit: Service tax liability (current liability)
up on payment to Govt:
Service tax liability -Debit
Bank -credit.
Note : service tax credit you can claim only in the next month to the payment month.

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