Taxation Entries for Vat,Excise,Service tax and TDS

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Home > Articles > Income Tax > Taxation Entries for Vat,Excise,Service tax and TDS

Taxation Entries for Vat,Excise,Service tax and TDS

CA Parul Saxena on 24 October 2013 Comments

Sometimes people have good idea about the taxation they know very well the provisions of tax and effectively compute the tax liability monthly/quarterly/halfyearly or yearly basis as the case may be. But at the time of making journal entries for such tax liabilities or payments they gets confused. This article through an light on making journal aspects. Lets start:I. Value Added Tax The organizations engaged in Sale and purchase transactions have to pay Vat liability. When they purchase material Vat is paid on purchases and when they sell material Vat is collected on material. Vat paid on purchase of material-Input Vat paid on Sale of Material-Output Output amount is adjusted with the input and the balance is paid to the department. Entries to be made are:At the time of Purchase of Material Quick Links Purchase Dr. Vat Input Dr To Creditors At the time of Sale of Material Debtors Dr. To Sales. To Vat Output.. At the time of Adjustment Vat Output Dr.. To Vat Input.. To Vat Payable (If Output>Input) At the time of Payment Vat Payable Dr.. To Cash/bank II. Service Tax Organizations engaged in providing services are supposed to pay service tax and following entries are made:Popular Articles Submit Articles Browse by Category Recent Comments

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28/10/2013 4:37 PM

Taxation Entries for Vat,Excise,Service tax and TDS

http://www.caclubindia.com/articles/taxation-entries-for-vat-excise-servi...

When services are received:Expenses Dr Service tax Input Dr To Party When services are provided 48 Debtors Dr To Revenue To Service tax Output At the time of Adjustment Service tax Output Dr. To Service Tax Input. To Service tax Payable. At the time of Payment Service tax Payable Dr. To Cash/bank. As you can analyze the entries for Vat and Service tax are almost same. Entries for excise duties too are on same parlance with a minor difference. Lets check out what are those differences. III. Excise Duty At the time of Purchase Purchase Dr.. Central Excise Input Dr.. Education Cess Input Dr. Secondary and Higher Education Cess Input Dr. To Creditors At the time of Sale Debtors Dr. Manufacturing Duty (Basic+Education Cess+Secondary & higher education cess) Dr. To Central Excise Output .. To Education Cess Output.. To Secondary & higher education cess Output To Sales (Including excise duty amount).. As per the guidance note of ICAI excise duty is added in Sales amount and in the financial statements shown by way of deduction from Sales figure. So corresponding figure of excise duty is recorded by name of manufacturing duty to nullify the impacts of duplication in records. IV. Tax Deducted At Source While making payments TDS is deducted as per the applicable provisions and such deducted tds is deposited with the department. At the time of deducting TDS Expenses Dr To TDS Payable. To Party At the time of deposit of amount of TDS TDS Payable Dr To Cash/Bank In Similar way entries for TDS deducted on income to be recorded.

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Taxation Entries for Vat,Excise,Service tax and TDS

http://www.caclubindia.com/articles/taxation-entries-for-vat-excise-servi...

At the time of booking of income Party Dr. TDS deducted To Revenue receipts. At the time of receipt of Income 48 Bank/Cash Dr.. To Party.. Hope now you get the idea of making journal entries of tax related transactions. Please comment on the article if you like or not. Thanks.
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93 Comments for this Article

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shravani
Wrote on 28 October 2013

thanku sooooooo much ,very helpfull

patel kanu Wrote on 28 October 2013 Thnk U So much for this article.

AFZALKHAN PATHAN Wrote on 28 October 2013 Thanks, this will very helpful. really.

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Taxation Entries for Vat,Excise,Service tax and TDS

http://www.caclubindia.com/articles/taxation-entries-for-vat-excise-servi...

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The Reality about Realty! What is IFRS? Debt Recovery Tribunal - The Influencing Factor Salary not part of taxable value under security services: HC Tips to choose Company Secretary Course Tax treatment of Agricultural Income Taxation Entries for Vat,Excise,Service tax and TDS New Return Forms under Delhi Value Added Tax Act, 2005 48 Related Party Transaction- Companies Act, 2013 Issues with sudden notification of 98 sections of the Act

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