Hi all, please help me with this. I am working for a service entity. We have purchased furniture for office purposes, and in the tax invoice, they have charged us VAT of Rs 23,000.
Input Tax Claim Under Service Tax
Can I claim input tax under service tax because we do not file sales tax? What happens if we have to file sales tax as well?
Accounting Entry Passed
Please correct me if I am wrong. I have passed the following entry in our books:
Furniture A/C Dr. xxx
Input Tax A/C Dr. xxx
To Sundry Creditor xxx
Sundry Creditor A/C Dr. xxx
To Bank xxx
Thank you.
From India, Bangalore
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Input Tax Claim Under Service Tax
Can I claim input tax under service tax because we do not file sales tax? What happens if we have to file sales tax as well?
Accounting Entry Passed
Please correct me if I am wrong. I have passed the following entry in our books:
Furniture A/C Dr. xxx
Input Tax A/C Dr. xxx
To Sundry Creditor xxx
Sundry Creditor A/C Dr. xxx
To Bank xxx
Thank you.
From India, Bangalore
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Hi You can’t take purchase bills for input of service tax. For service tax you should treat only service input and not sales tax input.
From India, Bangalore
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653From India, Bangalore
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Since the purchase is for own use, the firm is not entitled to avail Input Tax Credit. The entries seem fine, provided Furniture A/C includes Input Tax as well (i.e., capitalizing the total cost to Furniture A/C).
From India, Bangalore
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From India, Bangalore
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Considerations for Service Tax Registration
1. You should have Service Tax registration. If your gross profit exceeds 9 lakhs, the company should obtain registration from the Commissioner of Central Excise Service Tax cell.
2. If any capital goods are purchased, you should seek permission from the Service Tax authority through an official letter and state the detailed requirements for fixed assets (CG: Capital goods).
3. Once you receive approval, you can file a half-yearly return under Form No. ST3 and claim the CGIT subject to the approved percentage in a year. Your book of entries is correct, but you should create a ledger for CGIT instead of IT A/C and rectify it accordingly.
(The above information is for the service sector only).
Regards,
Yethee
[Email Removed For Privacy Reasons]
India and Middle East.
From India, Cochin
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1. You should have Service Tax registration. If your gross profit exceeds 9 lakhs, the company should obtain registration from the Commissioner of Central Excise Service Tax cell.
2. If any capital goods are purchased, you should seek permission from the Service Tax authority through an official letter and state the detailed requirements for fixed assets (CG: Capital goods).
3. Once you receive approval, you can file a half-yearly return under Form No. ST3 and claim the CGIT subject to the approved percentage in a year. Your book of entries is correct, but you should create a ledger for CGIT instead of IT A/C and rectify it accordingly.
(The above information is for the service sector only).
Regards,
Yethee
[Email Removed For Privacy Reasons]
India and Middle East.
From India, Cochin
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If you are liable for service tax, you can claim a set-off/CENVAT (Input Tax Credit) only on the service tax paid for any services you purchased. The vendor/service provider must be registered for service tax and must have charged service tax specifically shown on the invoice. Sales tax/VAT cannot be set off against service tax. However, excise duty, if specifically provided, can be claimed in CENVAT. Therefore, it is incorrect to charge a portion of the cost to input tax.
Thank you.
From India, Mumbai
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Thank you.
From India, Mumbai
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Service Tax.pdf