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BILLING SYSTEM AND Accounting Treatment In Case Of Reverse Charge Of Service Tax

BILLING SYSTEM AND Accounting Treatment In Case Of Reverse Charge Of Service Tax. CA NITIN GUPTA Email : nitin.gupta52@yahoo.com Download – www.taxguru.in. IN CASE OF SERVICE RECEVIER. IN CASE OF REVERSE CHARGE

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BILLING SYSTEM AND Accounting Treatment In Case Of Reverse Charge Of Service Tax

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  1. BILLING SYSTEM ANDAccounting Treatment In Case Of Reverse Charge Of Service Tax CA NITIN GUPTA Email : nitin.gupta52@yahoo.com Download – www.taxguru.in

  2. IN CASE OF SERVICE RECEVIER IN CASE OF REVERSE CHARGE • WHERE PAYMENT IS MADE TO THE SERVICE PROVIDER, WITHIN 6 MONTHS FROM THE DATE OF INVOICE POT = PAYMENT BASIS • WHERE PAYMENT IS NOT MADE TO THE S.P., WITHIN 6 MONTHS FROM THE DATE OF INVOICE POINT OF TAXATION RULE ARE APPLICABLE

  3. IN CASE OF SERVICE RECEVIER CRR ON INPUT SERVICE SERVICE TAX AMOUNT PAYABLE TO SERVICE PROVIDER(PARTIAL PAYABLE AMOUNT OF SERVICE TAX) ON OR AFTER THE DAY OF RECEIPT OF INVOICE PROVIDED THAT IF PAYMENT OF VALUE & SERVICE TAX NOT MADE WITHIN 3M OF THE DATE OF INVOICE THEN PAYMENT MADE TO DEPARTMENT EQUAL TO CRR AVAILED (DEBITING CCR OR PLA) PROVIDED FUTHER THAT IF PAYMENT MADE AFTER 3M THEN SERVICE RECEVIER CAN TAKE CREDIT WHICH WAS PAID EARIER PAYMENT MADE TO DIRECT DEPARTMENT ON PAYMENT OF VALUE OF SERVICE AND SERVICE TAX

  4. EXAMPLE Services by way of supply of manpower for any purpose or security services • Service Provided by Individual, HUF, partnership firm whether registered or not or AOP; which are located in taxable territory = 25 % • Service Receiver - Any business entity registered as body corporate and located in taxable territory = 75% • Body corporate here means as defined in section 2(7) of the Companies Act, 1956 [Rule 2(1)(bc) of the Service Tax Rules]

  5. Value of service provided by an individual ‘N’ – 100000 Service provider – 25% Service receiver – 75%

  6. BILLING SYSTEM BILLING DONE BY SERVICE PROVIDER GROSS VALUE(LABOUR CHARGES) 100000 (25% ON LAB. CHARGES i.e.25000) S.TAX 3000 EDU. CESS 60 SEC. CESS 30 TOTAL 103090

  7. AT THE TIME OF BILL RECEIVE FROM SERVICE PROVIDER EXPENSE A/C DR. 100000 CRR ON INPUT SERVICE(ST) A/C DR. 3000 CRR ON INPUT SERVICE(EDU CESS) DR. 60 CRR ON INPUT SERVICE(SEC CESS) DR. 30 TO SERVICE PROVIDER (N) 103090 (Being bill have been issued and received)

  8. AT THE TIME OF PAYMENT MADE TO SERVICE PROVIDER SERVICE PROVIDER (N) A/C DR 103090 DEFERRED CRR ON INPUT SERVICE(ST) A/C DR. 9000 DEFERRED CRR ON INPUT SERVICE(EDU CESS) DR. 180 DEFERREDCRR ON INPUT SERVICE(SEC CESS) DR. 90 TO BANK 103090 TO SERVICE PAYABLE A/C(ST) 9000 TO SERVICE PAYABLE A/C (EDU CESS) 180 TO SERVICE PAYABLE A/C (SEC CESS) 90 (Being payment made to service provider and as per rule-7 of POT service tax liability due)

  9. AT THE TIME OF PAYMENT MADE TO DEPARTMENT PAYMENT ENTRY SERVICE PAYABLE A/C(ST) DR. 9000 SERVICE PAYABLE A/C (EDU CESS) DR. 180 SERVICE PAYABLE A/C (SEC CESS) DR. 90 TO BANK A/C 9270 (Being service tax liability paid) CRR BOOK ENTRY CRR ON INPUT SERVICE(ST) A/C DR. 9000 CRR ON INPUT SERVICE(EDU CESS) DR. 180 CRR ON INPUT SERVICE(SEC CESS) DR. 90 TO DEFERRED CRR ON INPUT SERVICE(ST) A/C 9000 TO DEFERRED CRR ON INPUT SERVICE(EDU CESS) 180 TO DEFERREDCRR ON INPUT SERVICE(SEC CESS) 90 (Being CCR Book as per Rule 4(7) of CCR rule 2004)

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