Service tax on Transportation

[Former Member]

I have a client requirement on service tax for transportation.

The transport vendor does not provide service tax as part of the invoice, but we have to take service tax credit.

For all frienght expenses, we have to pay service tax to the authorities.

Service Tax Input .......... Dr

To Service tax Payable.....Cr

and the credit can be availed only after an equivalent payment is made to the transport vendor.

Service Tax Availed .......... Dr

To Service tax Inpute.....Cr

Ques: How do I take the credit for the service tax and create a liability to be paid to the tax authorities

Ques: How can the credit be availed on payment

Thanks

[saikrishna_vallurupalli · Accepted solution]

please go through the notes 1242881 and 1244301

[Former Member]

Hi,

Through Withholding Tax Codes this requirement is possible.

You have to create seperate WHT Codes & Types for Service Tax to be created in the config.

Also assign these Codes and Types in "Define Accounts for Withholding Tax Offsetting Entry".

Assign these codes & types in transportation vendor master.

While processing transportation vendor invoice, system creates additional liability for Service Tax postion like below:

Transportation Charges Rs.1000.00 Dr

Service Tax Offset A/c Rs. 100.00 Dr

Vendor A/c. Rs.1000.00 Cr

Service Tax Payable .Rs. 100.00 Cr

You can make payment to Department on monthly basis by passing the following entry:

Service Tax Payable Rs.100.00 Dr

Bank A/c Rs.100.00 Cr

After making payment to vendor you can avail Service Tax Credit by passing the following entry:

Service Tax Paid Rs.100.00 Dr

Service Tax Offset A/c. Rs.100.00 Cr

This way you can process Service Tax for Transportation vendors.

Regards

Sarma BH

[Former Member]

Use the GL account for Service Input tax. Enter the "tax amount" only and the tax code. Double click the line item so that it will compute for the base amount. For the Service Tax Payable account, make sure this is not a tax relevant account (tax category blank)