Service Tax Expenses

[Indrajit Mondal]

Dear Sir,

I have check a company A/c and they passed a entry on Service Tax on GTA like

1) Freight/Transportation Charges Dr. (under P/L A/c)

Service Tax Espenses A/c Dr. (under P/L A/c)

Service tax on GTA under RCM Cr. (under Liabilities)

Party A/c Cr. (under Liabilities)

Now my question how Service Tax Expenses will create instead of Deferred Service Tax Input A/c is the entry is correct..

Please reply...

AI Summary

Clarification on Accounting Entry for Service Tax on GTA under Reverse Charge: Use Service Tax Receivable if Credit Eligible. A query was raised regarding the accounting entry for service tax on Goods Transport Agency (GTA) under the reverse charge mechanism. The entry involved debiting freight/transportation charges and service tax expenses, while crediting service tax on GTA and the party account. The question focused on the correctness of creating a service tax expenses account instead of a deferred service tax input account. The response clarified that if the credit is eligible, the service tax receivable account should be debited; otherwise, using the service tax expense account is appropriate.