Service Tax program

[former_member221515]

Hi

As per service tax rules, service tax needs to be paid to government only when th amount is received from customer. So at the time of booking invoice, credit must go to service tax interim account and not service tax payable account. Similarly in case of advance, we need to pay service tax once the amount is received even though invoice is not billed to customer.

Let me know how to handle this.

[Former Member · Accepted solution]

HI Dear,

Only thing you need to undertake is to create new Tax Code and assign the final Service tax payable account to respective account key based on this tax code.....

Do not create this tax code as a Deferred tax code but the normal one......

Regards,

Chintan Joshi

[former_member2342 · Accepted solution]

Dear

As per my understanding, when an invoice is created the entry is

Customer A/c Dr xxxx

Income A/c Cr xxxx

Service Tax A/c Cr xxxx

Now you want to assign Service Tax Clearing Account in the above entry. Upto that stage it is OK. Then when you receive Service Tax amount from Customer naturally you give credit to Customer Account since billing is already done for service tax and here you cannot give credit to clearing account. Then by assigning/giving above clearing account does not serve our purpose.

In my view it is better not to debit Customer at all at the first instance with service tax amount.

So when you receive service tax amount, directly you can give credit to Service Tax payable account from where you can pay to the authorities.

Regards

[former_member221515 · Accepted solution]

Does it mean that i will have to create two service tax code - one for sending amount to interim account at the time of booking customer invoice (i.e. S1) and another for service tax program (i.e. S2).

And S2 i need to create normal tax code ?

Also i have never created tax codes (i.e. FTXP, OB40 and all i have never did). So also let me know how to create tax codes.

[Former Member · Accepted solution]

HI,

1. First you identify which are the condition type for service tax using transaction OBQ3.

2. Use transaction FTXP and enter following fields..

>Tax Code: S2 (any identiifier you want), press enter and give discription in the text field

>Tax type: enter input or output tax type.

3. Now enter the respective rates against the condition type you identified in step 1.

Now use transaction OB40 and assign GL account to Account Key assigned to service tax condition type based on tax code.

Regards,

Chintan Joshi

[former_member221515 · Accepted solution]

Ok will update U

[sanilbhandari]

Hi

For advance payment from customer use the final tax code while booking the advance. Make sure that the check id box is not ticked in the Tax Code master if you are using the function.

Regards

Sanil Bhandari