Reversal of service tax already or input

Save Share

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 September 2014 Dear All,

This is regarding reversal of "service tax payable" already paid.

Kindly advise/provide solution on keeping service tax provisions in mind:

Question: Service tax in case of finance company: Company is loan NBFC, it has levied service tax on front end fees on accrual basis and accordingly provided service tax payable in its books in the month of march2014 and payment of service tax was also made.
Later on, it was discovered that Service tax on the above front end fee was not to be received, and hence front end fee accounted as income in the FY2013-14 has to be reversed due to non receipt of front end fees and accordingly service tax already paid has to be taken as input credit.

My Question is how finance company should avail service tax input credit on service tax paid in view of service tax provision.
please provide accounting entry for reversal of "front end fee income", "service tax paid". Please also provide relevant section, clause of Finance Act 1994.

Thank you in advance.

Annu Agarwal

Annu Agarwal (Expert)

18 September 2014 Entries in march,2014

1.Customer A/c Dr 1,12,360
To Front end fees income 1,00,000
To Service tax payable on front end fees 12,360

2.Entry on 31.03.2014
Service tax payable Dr 12,360
To Bank 12,360

Entries to be made for reversal of front end fees:
Front End fees Dr 1,00,000
Service Tax Payable Dr12,360
To Customer A/c 1,12,360

Entry for reveesal of service tax paid as per Rule 6(3) of Service tax Rules ,1994

Input service Tax Dr 12360
To Service Tax Payable 12360

Now you can utilize the input credit of 12,360 against your service tax liability.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now