Reverse Charge Mechanism – How to pass Journal entry for the following and how to set off by M/s X 1. Expense - 9000 2. Service tax receivable – 1000 3. Sundry creditor – 10000 Service Tax payable under reverse charge mechanism ½ Paid by M/s X and ½ paid by Service receiver 1. Service Income - 12500 2. Service tax payable – 1250 (Total 2500 - ½ paid by service provider (M/s.X) ½ by receiver) 3. Sundry Debtor – 15000
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Reverse charge mechanism under service tax
Replies (3)
in the first case...the entry would be
Expense A/c dr. 9000
service tax input A/c dr. 1000
To sundry cred A/c 10000
Expense A/c dr. 9000
service tax input A/c dr. 1000
To sundry cred A/c 10000
and second entry would be
for the service provider
sundry Debtor A/c dr. 13750
To income A/c 12500
To service tax output A/c 1250
for the service provider
sundry Debtor A/c dr. 13750
To income A/c 12500
To service tax output A/c 1250
this second would be so done because of the fact that under R.C.M. the service provider only recovers his part of service tax and not the receiver's part of tax...but if in ignorance he recovers the receiver's part of tax then service receiver cant be denied of the input on on service tax deposited by service provider...to the maximum of liability of service receiver to pay such service tax
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