Wct-vat & service tax entry
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
19 March 2013
Dear All,
In Case of Works Contract Service we have to pay both VAT & Service Tax,
For VAT if we are not able to separate Value of Material & Labour charges we go for standard deductgion option (e.g. in Maharashtra 25% standard deduction is available for labour)and on balance we have to pay VAT,
However,for service tax the chargeable value is 40% of total contract price as per service tax rules.Therefore we are paying tax on 115%(i.e.75%+40%).What is the solution for this and how to pass accountinf entries.
Please reply at the earliest.
In Case of Works Contract Service we have to pay both VAT & Service Tax,
For VAT if we are not able to separate Value of Material & Labour charges we go for standard deductgion option (e.g. in Maharashtra 25% standard deduction is available for labour)and on balance we have to pay VAT,
However,for service tax the chargeable value is 40% of total contract price as per service tax rules.Therefore we are paying tax on 115%(i.e.75%+40%).What is the solution for this and how to pass accountinf entries.
Please reply at the earliest.
Sumit Grover
(Expert)
19 March 2013
Let us assume the amount charged by Service Provider(Exclusive of VAT & Service Tax) is Rs. 100
Following entries shall be passed
From Service Provider's Point of view:
(Assuming VAT rate is 10% on 75% of the value)
Debtor A/c Dr. (100+7.5+4.944)
To Income A/c 100
To VAT Paybale 7.50(100X75%X10%)
To Service tax payable 4.944
(100X40%X12.36%)
Following entries shall be passed
From Service Provider's Point of view:
(Assuming VAT rate is 10% on 75% of the value)
Debtor A/c Dr. (100+7.5+4.944)
To Income A/c 100
To VAT Paybale 7.50(100X75%X10%)
To Service tax payable 4.944
(100X40%X12.36%)
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