Prov. of Ser. Tax in case of prop.

 

Please tell me in case of proprietorship, when the assessee has charged service tax in his invoice but since the payment has not been released from his debtor (as on 31st march) he has not paid the service tax. Do he has to take the provision of service tax due to pay to service tax department.

If yes do this is mandatory or optional.

If not what would be the effect and treatment of service tax charged in invoice. Where it will be shown.

Please help me out............

Replies (4)
While rasing invoice, he would have passd the following entry (assuing 100 income+12.36 st) Debtor Dr.112.36 Income Cr.100.00 (P&L) St Cr. 12.00(Liablity) Cess Cr. 00.24(Liability) SHE Cr. 00.12(Liability) Service tax is payable only in case of realization in this case if nothing is received no entry need to pass for any provision as it automatically takes care of the same

Ok i agree with your comments. Thanks.

But as per your remarks it means that "Service Tax" will be shown in liabilities side (under head outstanding exp)  till the payment is due.

I am satisfied with above answers but one thing I want to tell you that the taxable event for the service tax is providing of services not payment.  But service tax shall be payable only on receiving of service charges.  No separate provision was required since entry at the time raising bill was contain the credit entry of service tax payable which shows its liability.

 

The liability to remit service tax arises on account of MONEY RECEIVED for services rendered or TO BE rendered.

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