service tax input and output

Dear KV Sukumar,

A/c entries will be as follows:-

FOR SALE OF SERVICE

1) At the time of BILLING

 DEBTOR A/C........................Dr             13,236

          To Income                                                          12,000

           To Service Tax Output A/c                                1,200

            To Edu. Cess Output A/c                                  36            

2) At the time of receipt (after 90 days)

Service Tax Output A/c .......................Dr       1,200

Edu. Cess Output A/c .......................Dr             36  

                To Service Tax Payble A/c                                 1,200

                  To Edu. Cess Payable A/c                                    36

SIMILARLY FOR PURCHASE OF SERVICE

1) At the time of BILLING

EXPENSE A/C........................Dr             10,000

 Service Tax Input A/c ..........Dr               1,000

 Edu. Cess Input A/c..............Dr                     30        

               TO Creditor A/c                                                  11,030

2) At the time of payment (after 30 days)

Service Tax Input A/c .......................Dr       1,000

Edu. Cess Input A/c .......................Dr             30  

                To Service Tax Payble A/c                                 1,000

                  To Edu. Cess Payable A/c                                    30

MR.Amir

Thank you for your reply . Correct if  i am wrong .

At the time payment i think service tax payable a/c should be debited and not credit . I think it might be typing error .

Please let me know whether it should posted as journal entry .

sukumar 

Dear K V Sukumar,

There is no typing error, the said entry is FOR UTILIZING THE INPUT CREDIT( since the same is allowed only on payment)

In service Tax, Creit is allowed on Payment & Liability also arises on receipt that is why -

I tell u why I suggested u to pass entry in this manner, BECAUSE THIS WILL ENABLE U TO DEPOSIT THE SERVICE TAX SIMPLY BY LOOKING AT THE BALNCE ON THE LAST DAY OF THE MONTH IN "SERVICE TAX PAYABLE A/c"

No need to do separate calulations to work out the figure of actual payment since the sme is reflected by ur "Service Tax Payable A/c"

At the time of payment (after 30 days)

Service Tax Input A/c .......................Dr       1,000

Edu. Cess Input A/c .......................Dr             30  

                To Service Tax Payble A/c                                 1,000

                  To Edu. Cess Payable A/c                                    30

I respectfully admire the reasoning given by Mr. Amir. But the service tax payable accouny has to be debitted on payment so that it would amount to claiming of input credit on payment. If the erroneous entry is retained, it would increase the liability to the tune of Rs. 1030

Dear Pawan,

Thanks very much, ya I admit that was a Blunder, not a mistake...

I simpled cuted the above entry & pasted it & Forget to made changes on Debit & Credit side...

Dear Sukumar Sir really sorry u even pointed at the mistake but I overlooked it

The correct entry would be as follows -

At the time of payment (after 30 days)

Service Tax Payable A/c .......................Dr       1,000

Edu. Cess Payable A/c .......................Dr             30  

                To Service Tax Input A/c                                 1,000

                  To Edu. Cess Input A/c                                    30