service tax accounting treatment

hey service tax liability arises at the time of receiving payments from payee.

At the time you receive payments you should recognse it in accounts as liability.

for service provider

Cash/bank/party    dr

 To Service tax payable

 To income

For service reciever

Expense     Dr

Service tax credit a/c     dr

 To Cash/bank/party

Bal in service tax payable a/c is to be deposited to govt on proper due dates applicable.

Bal in service tax credit a/c is adjusted off with service tax payable for the some service provided. That credit is for input service & payable is for output service.

 Pls go through the file attached.