If yu want to avail Cenvat credit of service tax paid, then follow Entry No. 2 explained by Jai Kukreja.

Hello,

In March as you are making provision for Audit fees, You cann't avail the Service Tax in March as you have not recd the Invoice im March. Hence we have Kept the entry in Service Tax Available Provision Account (Asset)

Once you receive the Invoice You Can Avail the credit in that month only.

Hence Your Accounting entry   while making payment  in the month you receive the Invoice to Auditor would as follows :

Audit Fee Payable (Liability) A/c Dr

Service Tax Available AVAILABLE (Asset A/c) (12.36% of your Bill) Dr

      To Service Tax Available Provision (Asset A/c)  (12.36% of your Bill)

       To Bank

After passing this above entry you could avail the Service Tax in the month of receipt of Invoice not in March

Dear Prateek ,

Just a small correction in your words  it would be Entry No. 1 instead of 2

You need to account basic value without service tax and TDS also need to be deducted on basic value...

However, when you receive invoice from Auditor which normally be dated after 31st March only, you need to account service tax (Only in case availing CENVAT credit) and deduct TDS on service tax part of the Invoice.

Any other views please..!

Daer Dashrath,

In case when we know the evrry thing on actual basis including actual liability , expense &  service tax chageable by auditor we can't be on part of default by not booking service tax entry not deducting TDS on service tax amount. 

You would surely face tax audit issues on being part of default of lesser deduction

For year end provisions, companies follow simple accounting practice to avoid the complications

If the service tax is eligible for input credit, book receivable only when the bill is received in order to avoid interpretation rules for eligibility of input credit on provisons.

If at any cut off date, provision is to be made, make only basic value and deduct TDS on the amount of basic provision.

Next period, reverse the entry and book the correct bill as suggsted in case 1 and deduct differential tds in next year. Follow this consistently.

This will serve the pupose of income statement as well as establish the clear eligibility of servcie tax input credit in the month when the bill is received.

Alternative:

If you know the exact amount of bill with service tax, book full provision and deduct full tds. However, the service tax input will be received when the bill is received and may not be eligible when booked on provision basis. Till that time debit "other assets" account in balance sheet.

You may refer input credit rules for such service tax accounted by virtue of a provision.

please help!!

why the rate of ST should be 12.36% while on 31.3.12 it was 10.3%??

What are grounds for deciding the applicabilty of rate of ST??

If the service rendering party raises an invoice post march 31, 2012, it will levey 12.36%. Refer Point of levey rules for more information.

Please explian the karan Mehata point in detail ?

Dear Mr Mehta & Mr. Mishra,

First of all sorry for the delay in replying.

Now if you would  see the examples given by me  in the trailing ,states  we shall account the unavailed  Service Tax in  Asset account " Service Tax available Provision". Now as we know bill would be raised in next FY only, i.e FY 12-13 & the preavailing rate in FY for service tax is 12.36%. So the the bill which we would receive would surely be with 12.36%.  

As we haven't recd the Invoice yet ,we could not avail the Service Tax Credit hence we have kept the Service tax in Service Tax available Provision (Asset Account) & would avail the service tax at the time of receipt of Invoice in Fy 2012-13 (Request you to please  refer the accounting examples given in this regard in the trail ,for better clarification on accounting part)