Reverse charge accounting

Siddharth (Thinker) (267 Points)

09 October 2014  

Heyy all,

ABC co ltd. who trades in Goods received Works Contract Service worth 498000

so the co. accounts this transaction as follows:

Expense A/c.........................528776

    To Creditor A/c.......................................498000

    To Service tax (Reverse Charge)A/c..........30776

Is the above JE right?

Why cant the company debit a "Service Tax Recoverable A/c" of 30776 and then after paying the Reverse charge liability, claim the ST Recoverable as refund?

Please reply

Thanks in advance ;)