Adjustment for Service Tax

In case of exclusive method of accounting :

Dr.  Service Charges A/c.   xxxx

Cr.        Service Tax Payable A/c.   xxxx

In case of inclusive method of accounting :

Dr.  Service Tax A/c.   xxxx     [This a/c. should be transferred finally to P&L  

                                                     A/c.]

Cr.         Bank A/c.                xxxx 

When raising invoice:

DEBTORS ACCOUNT           Dr.         12000

To Service Charge A/c.                                        10680

To Service Tax Payable A/c.                                    1380

When the Tax in paid into Govt Account:

SERVICE TAX PAYABLE A/C.     Dr.      1380

To BANK A/c.                                                        1380.

The Service tax payable account can be grouped as "provisions"under current liabilities.