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Example 3
Payment Made in Advance
The Company entered into connect with Max Ltd on 25 April for 100,000+ Service Tax 15%
Whole amount paid in advance on that date to Max Ltd
Bill Received on 10th June from Max for Consultancy Service
Pass Entries assuming no TDS
View AnswerThere can be 2 Cases
Our Company is taking Input of Service tax(We are Service Providers registered in Service tax or Factory Registered in Excise)
Our Company is not taking Input of Service tax (We are a Vat Dealer or a NGO)
Entry is different in both cases as shown below
|
Not Taking Input |
Taking Input |
|
Entry for Advance Paid
Max Dr 115000 To Bank 115000
|
Entry for Advance Paid
Max Dr 115000 To Bank 115000
Input Service Tax 14000 Input KKC 500 To Max 14500 (Max has to issue a Invoice for Advance Received, on basis of which we can take Input) |
|
Entry for Bill Received Consultancy Exp Dr 115000 To Max 115000
|
Entry for Bill Received Consultancy Exp Dr 100500 To Max 100500 |
Example 4
Pass Entry in Example 3 assuming TDS is applicable
View AnswerEntry is different in both cases as shown below
|
Not Taking Input |
Taking Input |
|
Entry for Advance Paid
Max Dr 115000 To Bank 105000 To TDS 10000
|
Entry for Advance Paid
Max Dr 115000 To Bank 105000 To TDS 10000
Input Service Tax 14500 Input KKC 500 To Max 15000 (Max has to issue a Invoice for Advance Received, on basis of which we can take Input) |
|
Entry for Bill Received Consultancy Exp Dr 115000 To Max 115000
|
Entry for Bill Received Consultancy Exp Dr 100000 To Max 100000 |
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