Financial postings for service tax on transportation of goods

This functionality is specific for India.

The CENVAT credit is available for service tax paid for transportation of goods. The financial postings for service tax is explained with an example.

Company X pays freight amount of INR 10,000 to the GTA Company Y. The Taxable amount is INR 2500, Service Tax is 12 per cent (INR 300) and Education Cess is 2 per cent (INR 6). Total service tax and education cess amount is 306.

Note

The ledger accounts for each VAT tax code are defined in the Posting Data for Tax Codes (tfgld0171s000) session. The Service tax payable and Vendor account are defined in the Accounts by Financial BP Group (tfacp0110m100) session. The bank account selected for the transaction type used for the bank in Cash Management module.

Step 1. At the time of transaction

Debit/ Credit	Ledger Account	Amount
Debit	Freight	INR 10000
Debit	CENVAT Credit receivable	INR 306
Credit	Vendor (Y)	INR 10000
Credit	Interim Service tax	INR 306

Step 2. On Payment of freight to vendor:

Debit/ Credit	Ledger Account	Amount
Debit	Vendor	INR 10,000
Debit	Interim Service tax	INR 306
Credit	Bank	INR 10000
Credit	Service Tax Payable	INR 306

Step 3. On Remittance of Service tax to Government:

Debit/ Credit	Ledger Account	Amount
Debit	Service Tax Payable	INR 306
Credit	Bank	INR 306

Step 4. On raising on Journal Voucher to update CENVAT credit pool

Debit/ Credit	Ledger Account	Amount
Debit	CENVAT credit available	INR 306
Credit	CENVAT Credit Receivable	INR 306

Step 5. On Utilization of CENVAT Credit against Excise duty or output service.

Debit/ Credit	Ledger Account	Amount
Debit	Service Tax Payable or Excise duty payable	INR 306
Credit	CENVAT Credit Available	INR 306

Step 1. At the time of transaction:

Debit/ Credit	Ledger Account	Amount
Debit	Freight	INR 10,306
Credit	Vendor (Y)	INR 10,000
Credit	Interim Service Tax	INR 306

Step 2. On Payment of freight to vendor:

Debit/ Credit	Ledger Account	Amount
Debit	Vendor	INR 10,000
Debit	Interim Service tax	INR 306
Credit	Bank	INR 10,000
Credit	Service Tax Payable	INR 306

Step 3. On Remittance of service tax to Government :

Debit/ Credit	Ledger Account	Amount
Debit	Service Tax Payable	INR 306
Credit	Bank	INR 306