Service tax entry according to new rule

Mr. Rajendra, the treatment suggested by Ms. Muthulakshmi is correct. However, there is some technical mistake on the part of taxation.

As per Rule 3 of Point of taxation rules, 2011, the time of rendering of Service is earlier of following:-

a.Issuance of Invoice; or

b.Receiving an advance from client.

 Hence, due to this, you have to provide the liability of Service Tax at the time of receiving an advance and the entries be:-

a. Receiving an advance:-

-Bank A/c                   ...Dr. 95,180

        To Advance from Customer        86,292

        To Service Tax Payable                  8,888

b. On the date of making payment of Service Tax:-

-Service Tax Payable  ...Dr. 8,888

         To Bank A/c                                      8,888