Accounting of service tax exp not considered for tds

Alok Parida (Asst Manager-F&A) (26 Points)

07 April 2014  

Dear Friends,

After circular 1 of 2014 dt 13.01.2014 service vendor charging service tax in his bill is excluded for deducting TDS. The entry before circular is:- Consultancy Exp Debit 112360   (Base price 100000 + Serv Tax 12.36% 12360)

                                         Vendor A/c      Credit      101124

                                         TDS u/s 194J   Credit        11236

But now since tds is to be deducted on base price ie on Rs100000/- TDS is 10 on it ie Rs.10000

What would be the correct entry:-

1. Consutancy Exp    Debit     1000000

   Service Tax Exp     Debit        12360

   TDS   Liab             Credit       10000

  Vendor A/c             Credit     102360    

2. Consultancy Exp  Debit      112360

    TDS Liab            Credit         10000

    Vendor A/c         Credit       102360


Pl advise as users using SAP accounting package entry no-1 is possible .


Please advise..