| # 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
Related topics Service tax on transportation of goods |