Treatment of service tax input which is not eligible cr

Queries 305 views 4 replies

Dear all

i need some info..

accoutning treatment for Service tax input amount ( which is not eligible for take credit)

so we used to charge it off as rate & taxes -ST 

is it correct? 

 

Replies (4)

I suggest you to charge it off to the respective expense account

Thank for your reply.

if we do it like that TDS validation will have impact. ( recently we received notice fro  IT for short dedcuted on TDS on legal and professional charges) 

any other head of expenses? 

please suggest 

 

  1. Do you mean to say the ST component was shown as expense in the TDS return and hence notice? If yes, then it is wrong to show total expense (including ST) in the 26Q. If only the expense (without ST) is mentioned under amount paid/credited, then there may not be any problem. Suppose the data for 26Q is auto-generated, then you can show the ST component under a new head: relevant expense a/c suffixing ST (e.g. rent & rent-ST)
  2. Further, if you show such ST amount under rates & taxes (as you have been doing it right now), it would be an extra work to prepare separate statement of reconciliation for the purpose of audit.

thanku for valuable suggestion


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