SERVICE TAX TREATMENT IN ACCOUNTS

In my opinion it should not be included in sales, like tds treatment the same treatement will apply. Moreover in service tax case there is adjustement like cenevat credit, before applying we have to consider this also.

hello this is gaurav

service tax should be shown seprately and it should not be shown in sales figure say service tax liability occurs only when payment is received from party in should be shown under head duties & taxes under head current liablities.

u can mail me at cagaurav1234 @ gmail.com
or wanna contact at 9313198281

Hi,

in profit and loss account, services tax treatment :

sales  rs 100
Services tax Rs 10.20

Total turn over Rs 110.20

ser ic e tax should be treated like other indirect taxes such as excise and sales tax. It should be added to the sales turnover but should show seperately as service tax receovered in profit and loss account. while service tax payable ( ie service tax payable on services billed but not yet recd. debtors) should be shown as  current liability.

In future if one invoice - debtors turn bad or cancelled , then the amount of service tax include on such sales invoice shall also be written off.

See for example :Sales Rs 100000; ser tax rate 10.2%, debtors Rs 20000 and sales reced Rs 80000/-. So Service tax recd and paid to govt Rs 8160(10.2%) during the year and Rs 2040 (10.2% on Rs 20000) is payable and included in Debtors.and will apy after  receipt.
Solution:

PROFIT AND LOSS EXTRACT
Income:

sales                    Rs 100000
service tax recov    Rs   10200    Rs 110200

Less: Expd

admin expenses   Rs 20000
finance expenses  Rs 30000
Service tax paid    Rs   8160  Rs 58160

Profit                                        Rs 52040

B/Sheet Extract

Curent Liability
Service tax Payable Rs 2040/-

Current assets
Debtors         Rs 22040/-

Hope this example will clear your accopunt doubt at least.

Regds
Vishwajeet