Accounting entry for vat

Party A/c Dr.....21363.

To Labour Charges A/c.....19125.

To ST A/c...............................656.

To VAT A/c..............................1582.

NO TDS.

Above entry posted by Mr. Nirav is not correct. The transaction is an expense if i am not wrong entry would be :

Labour charges a/c Dr            Rs.19,125

Service tax ( receivable) Dr     Rs  1,970 ( 10.30% on labour charges)

VAT receivable Dr                    Rs.  1,687  ( 8% on Labour charges + Serv.tax)

To Party a/c Credit.                 Rs.   22,782

One more question is labour charges is an service how can there be VAT on services.? If there is service tax than please explain what kind of transaction is the same.

Above entry posted by Mr. Nirav is not correct. The transaction is an expense if i am not wrong entry would be : Labour charges a/c Dr            Rs.19,125 Service tax ( receivable) Dr     Rs  1,970 ( 10.30% on labour charges) VAT receivable Dr                    Rs.  1,687  ( 8% on Labour charges + Serv.tax) To Party a/c Credit.                 Rs.   22,782 One more question is labour charges is an service how can there be VAT on services.? If there is service tax than please explain what kind of transaction is the same.

Labour charged is a Contract for eg. showroom renovation expenses the VAT has been charged on labour which comes under contract.
 

As you know to charge VAT there has to be sale of goods. And entire labour charge amount should be a sale of a good than only you can charge VAT but Labour charges are services and not goods hence no VAT should come in this transaction.

VAT if existing would be on some goods supplied in the course providing labour charges , and 8% VAT should be charged on goods only and not on the Labour charges.

Originally posted by : Bhavesh C. Vyas
	How to pass the entry for the VAT if the service tax part is included in  the Tax Invoice for E.g. The Tax Invoice Consists of Labour Charges Rs. 19125/- (Exclusive of Service Tax and VAT) Add,: Service Tax @ 10.30% on 19125/- and 33% on service Tax Amt. Rs. 656/- And 8% VAT on there on i.e. Labour Charges Rs. 19125.00 S.T. @ 10.30% & Rs.    656.00 Total                    Rs. 19781.00 VAT @ 8% on ab.Rs.1582.00 Total                    Rs.21363/- How to account the same Whether TDS has to be deducted and which amt. has to be taken as VAT. Can anybody pls. explain in the details.

Can you elaborate a bit,

Under which provision you are adding VAT on labour charges.

In the Above Case it is not Clear that in which Books of Accounts we have to made Journal Entry. In My Openioun.

In Case of Service Receiver Following Journal Entry Will Be Passed:-

Labour Charges A/c Dr.     19125.00

Service Tax          A/c Dr.          656.00

 Value Added Tax  Dr             1530.00

                       To TDS  Party  Cr   -                 213.00

                       To Party A/c                           -    21098

*Vat is not Charged on Service tax

*TDS Will be Duducted While Making Journal Entry (Labour Charges+SV Tax+Vat)

If we have made a journal Entry In Books of Service Provider then:-

Party Ac Dr- 21311

  To Labour Charges Cr 19125

   To Service Tax         Cr      656

   To Vat                        Cr      1530