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Former Member
Jan 06, 2011 at 11:42 AM

Wrong revaluation of Service tax liablity in case of foreign services

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Dear All,

I am recording a professiona fees invoice of a foriegn vendor by using special G/L. Since there is service tax liability of 10.3% on the same and the same needs to be borne by us on doing MIRO the entry is as follows.

1st dec 2010.

Professional fees 1000$

Professional fees 10.30 $

To Vendor 1000$

To Service Tax Liablilty 10.30 $

Exchange rate is 1$ is 50 INR on 1st dec .................. and 1$ is 51 INR on 1st jan

Now the service tax liabilty which is INR 515 .

When i run the foreign currency revalution on 2nd Jan then system revalutes the service tax liablity to INR 525.30 .which is incorrect.

what should i do to keep the service tax liability to 515 as per the act.

Thanking you,

Best Regards,

CA Satish Prabhu