BILLING SYSTEM AND

Accounting Treatment In
Case Of Reverse Charge Of
Service Tax
CA NITIN GUPTA
Email : nitin.gupta52@yahoo.com
Download www.taxguru.in

IN CASE OF SERVICE
RECEVIER
IN CASE OF REVERSE CHARGE
WHERE PAYMENT IS MADE TO THE SERVICE PROVIDER,
WITHIN 6 MONTHS FROM THE DATE OF INVOICE
POT = PAYMENT BASIS
WHERE PAYMENT IS NOT MADE TO THE S.P., WITHIN 6

MONTHS FROM THE DATE OF INVOICE

POINT OF TAXATION RULE ARE APPLICABLE

IN CASE OF SERVICE
RECEVIER
CRR ON INPUT SERVICE

SERVICE TAX AMOUNT PAYABLE TO SERVICE

PROVIDER(PARTIAL PAYABLE AMOUNT OF
SERVICE TAX)

PAYMENT MADE TO
DIRECT DEPARTMENT
ON PAYMENT OF VALUE
OF SERVICE AND
SERVICE TAX

ON OR AFTER THE DAY OF RECEIPT OF INVOICE

PROVIDED THAT IF PAYMENT OF VALUE &
SERVICE TAX NOT MADE WITHIN 3M OF THE
DATE OF INVOICE THEN PAYMENT MADE TO
DEPARTMENT EQUAL TO CRR AVAILED (DEBITING
CCR OR PLA)
PROVIDED FUTHER THAT IF PAYMENT MADE
AFTER 3M THEN SERVICE RECEVIER CAN TAKE
CREDIT WHICH WAS PAID EARIER

EXAMPLE
Services by way of supply of manpower for any
purpose or security services
Service Provided by Individual, HUF, partnership firm
whether registered or not or AOP; which are located in
taxable territory = 25 %
Service Receiver - Any business entity registered as body
corporate and located in taxable territory = 75%
Body corporate here means as defined in section 2(7) of the
Companies Act, 1956 [Rule 2(1)(bc) of the Service Tax Rules]

Value of service provided by an individual N

100000
Service provider 25%
Service receiver 75%

BILLING SYSTEM
BILLING DONE BY SERVICE PROVIDER
GROSS VALUE(LABOUR CHARGES)
100000
(25% ON LAB. CHARGES i.e.25000)
S.TAX
3000
EDU. CESS
60
SEC. CESS
30
TOTAL
103090

AT THE TIME OF BILL RECEIVE FROM SERVICE PROVIDER

EXPENSE A/C
DR.
100000
CRR ON INPUT SERVICE(ST) A/C
DR.
3000
CRR ON INPUT SERVICE(EDU CESS)
DR.
60
CRR ON INPUT SERVICE(SEC CESS)
DR.
30
TO SERVICE PROVIDER (N)
103090
(Being bill have been issued and received)

AT THE TIME OF PAYMENT MADE TO SERVICE PROVIDER

SERVICE PROVIDER (N) A/C

DR 103090
DEFERRED CRR ON INPUT SERVICE(ST) A/C
DR. 9000
DEFERRED CRR ON INPUT SERVICE(EDU CESS) DR.
180
DEFERREDCRR ON INPUT SERVICE(SEC CESS) DR.
90
TO BANK
103090
TO SERVICE PAYABLE A/C(ST)
9000
TO SERVICE PAYABLE A/C (EDU CESS)
180
TO SERVICE PAYABLE A/C (SEC CESS)
90
(Being payment made to service provider and as per rule-7 of
POT service tax liability due)

AT THE TIME OF PAYMENT MADE TO DEPARTMENT

PAYMENT ENTRY
SERVICE PAYABLE A/C(ST)
SERVICE PAYABLE A/C (EDU CESS)
SERVICE PAYABLE A/C (SEC CESS)
TO BANK A/C
(Being service tax liability paid)

DR.
DR.
DR.

9000
180
90
9270

CRR BOOK ENTRY

CRR ON INPUT SERVICE(ST) A/C
DR.
9000
CRR ON INPUT SERVICE(EDU CESS)
DR.
180
CRR ON INPUT SERVICE(SEC CESS)
DR.
90
TO DEFERRED CRR ON INPUT SERVICE(ST) A/C
TO DEFERRED CRR ON INPUT SERVICE(EDU CESS)
TO DEFERREDCRR ON INPUT SERVICE(SEC CESS)
(Being CCR Book as per Rule 4(7) of CCR rule 2004)

9000
180
90