Accounting of service tax exp not considered for tds

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..

 

Regards,

Alok   

Replies (1)

If the entity is registered for service tax and is eligible to claim service tax paid as an input, then the first entry is correct. If service tax input is not required, then the second entry is correct.

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