TDS and service tax on royalty payment

Hi,

Please explain me the computation of TDS(10.56%) and Service tax (12.36%) on Royalty Payable to Foreign Company.

TDs has to be grossedup.

and please aslo let me know the Accounting entry for Gross royalty, TDS, Service tax and Foreign Vendor. 

Please help.

 

Thanks & Regards,

Ratna

Replies (1)

Suppose the royalty is Rs 100000. Then ST on the same @ 12.36% would be 12360. The total comes to 112360.  Now TDS needs to be made @ 10.56% on the amount 112360 which comes to 11865. the entry for teh same would be

Royalty A/C  Dr  100000

Service Tax Dr     12360

To-  TDS Payable                    11865

To- Party                                   100495

(Debit to ST only if credit is taken for ST payment else Debit the Gross to Royalty)

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