Service tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 February 2010 Hi Sir,

Can you please tell me what is the journal entry of service tax passed when the bill is issued to the Service receiver ?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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05 February 2010 Service receiver a/c Dr
To Service charges Recd
To Service tax receivable
TO E.cess receivable
TO SHE.cess receivable

Message likes : 1 times

Rahul Gupta

Rahul Gupta (Expert)
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07 February 2010 The entry provided by Mr. Ramesh is correct and gives the same net result as mine.
However based on my Experience, I suggest the following entry can be made in order to have a difference between the service liability for the month which arise on the receipt of the amount from the service receiver and the service tax amount for which the receipts have not received till date.
The logic for this is that in Service the liability to pay service tax arise on the receipt of payment from the service receiver. Also, it benefits in making reconciliations of service tax liability during audits.

Debtor Dr
Service Income Cr
Service Tax Suspense Cr
Edu Cess Suspense Cr
H Edu Cess Suspense Cr

When we receive money from the debtor we will pass two entries:

Bank Dr
Debtor Cr

Service Tax Suspense Dr
Edu Cess Suspense Dr
H Edu Cess Suspense Dr
Service Tax Payable Cr
Edu Cess Payable Cr
H Edu Cess Payable Cr

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CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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07 February 2010 Yes.Mr.Rahul is point also should be considered we can maintained suspense account because of Service tax payable based on relisation

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