Service tax provision at year end

Dear all,

Do we need to provide Service Tax along with the charges for taxable services at the fin. year end even if the bill is not received?

i.e.

Which is the correct entry for creating provision?

1.

Professional Charges(Dr)               100.00

Service Tax (Dr)                                     12.36

    To Provision for Expenses (Cr)                 112.36

 

Or

2.

Professional Charges (Dr)                100

      To Provision for Exp (Cr.)                        100

 

Further,

If Service Tax is booked on provisional basis (As per eg.1), can we take input Credit for the same in this Fin. year itself?

Please Help.

Replies (1)

In my opinion, the following entry(TDS Effect hasnot been taken into consideration while replying the query) should be passed for the provision:

Professional Charges A/c Dr.1,00,000

CENVAT Not due(Or CENVAT Deferred) Dr. 10,000

                                  To Provision for expense             1,10,000

 

After booking of expense on the basis of actual invoice

1) Provision for expense A/C Dr.   ----- 1,10,000

                                 TO Professional charges               1,00,000

                                 TO CENVAT Not Due A/C                   10,000

2) Professional expense A/c Dr.-----1,20,000

    CENVAT Due A/c                   Dr.         12,000                                 

                                            TO Party A/c                       1,32,000

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