cenvat

In March:-

Telephone exp dr    1123.6

                 To Outstanding exp    1123.6

(Assuming no CENVAT credit of Input service is to be taken)

In 2008-09. When payment is made

outstanding exp dr     1123.6

                   To Bank/Cash              1123.6

Any probs...

no we have to take credit of cenvat.n bill is paid in april 08whre as booking is in March 08

Hello Mr. RJ where is CENVAT cedit.

Correct entries are:

I assumed that there was nrequirement of CENVAT credit ....but when CEN cr is to be taken than ....

Mr. AKS entries will work.

thanks alot  yaar

The entries given by Mr Akashdeep will always work... That is only the correct entry.

I would like to add one thing that:-

Charging exp 1000 in earlier year is OK but What about Provision of 123.60 which should also be provided as O/S liability in earlier year.

Though CENVAT cr can only be taken on payment but liability recognition should not be affected by that.

So, Entries Should b:-

Telephone exp.............................................................. Dr          1000

Service tax recoverable.............................................Dr                 120

Education Cess recoverable.....................................Dr.               2.4

Secondary and Higher Education Cess recoverable...........Dr.  1.2

                                TO o/s exp         1123.6

       NEXT YEAR

O/S Exp................................Dr   1123.6

 TO Bank/Cash........1123.6

                           &

CENVAT credit availed A/c(Under diff head) .....................Dr  123.6

                        To Service tax recoverable..           120

                     To Education Cess recoverable..           2.4

                     To Secondary and Higher Education Cess recoverable     1.2

Note:- Only by debiting amount to SERVICE TAX Recoverable doesnot mean that we have taken credit of that amount.

Hello Mr. Rj

Liability of service tax arise in the next year i.e., 2008-09. So, we don't recognise 123.6/- in 2007-08

i didn't understand , Pls explain me ?

why we don't recongnise in 2007-08 since it relates to march i.e, for the accounting year only ?

Service tax is a concept of cash basis, liability of service tax arises on payment i.e., in 2008-09

Hi,

Mr. AKS Yes u r correct that the liability of ST arises in next f.y BUT.

THE LIABILITY FOR PAYMENT(To BSNL) OF 123.6 has to be booked in the year when it relates to.

Making provision of Only thousand Rs (in 2007-08)  will show that your liabilty is only Rs 1000(toward telephone exp) for the month of march.whereas actually it is 1123.6.

Its violation of accrual concept

MAking provision for exp as per accounting concept is not related to payment of ST liabiliy.

It is other part of the case that you will be taking credit of the ST part in the next year....

Sorry, i was wrong, correct enteries are; (now i m 100% sure, its true, i was little confused) 

In March:-
Telephone exp .................................dr    1000

Cenvat Credit Suspense A/c..........dr       123.6

                 To Outstanding exp                                            1123.6
(No CENVAT credit of Input service is to be taken in march because there is no payment)
In 2008-09. When payment is made

outstanding exp.........................................................Dr.              1123.36

                    To Bank/Cash                                                                                    1123.6

                                                             AND

Service tax recoverable.............................................Dr                 120

Education Cess recoverable.....................................Dr.                2.4

Secondary and Higher Education Cess recoverable...........Dr.  1.2

                                     To cenvat credit suspense A/c                                                           123.6

Yes,

In alternate to recoverable a/c one can also debit suspense a/c of CENVAT.

A/C head differs from organization to organization.