Service tax adjustment

Dear Nitin,

 

Rental Income will be shown as Rs 100/- only. The Remaning Rs 6.18/- service tax that is beared by the land lord will be adjusted from its drawing as its going out of his pocket. & as you are saying to book Rs 93.82 as income that is not a right treatment as you are showing understated income. by claiming Rs 6.18/-  as expense.

 

Dear Pradeep,

 

Thanks for your response.

I somehow don't agree to your opinion. It has been clearly provided in Service tax act that when the payee is not paying service tax the amount of payment would be assumed to include service tax component. Going by that ground if I deduct the tax component from the payment, the income automatically lowers.

What's the take on this? 

Dear Nitin, the clause u have said regarding the inclusive of service tax, is applicable when the service tax is charge & paid on recepit basis, but now a days service tax is been charge & paid on payable basis. it doesn't made any difference tht u have receive the tax amounts from the clients or not, u have to pay the tax if u have generated the bill with in the due time. so according to this if payee has not paid the service tax then u have to paid it, from out of ur pocket. in tht situation you have to book rs 100 as income & rs 12.36 as service tax. 12.36 is to be deposited by u to the govt. u can book rs 6.18 as bad debts, as u have not receive tht remaining amt frm the party