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Currently
A Service Provider cannot claim input of Service Tax on Expense Bills
However he can take input of Service tax and Excise

Q3

Service and Expenses

B LTD AIRTEL
Purchase 60000 TELEPHONE 2000
vat 5% 3000 Service Tax 14% 280
  63000 Swachh Bharat Cess 0.5% 10
    Krishi Kalyan Cess 0.5% 10
      2300
X LTD
Sale 100000
vat 5% 5000
  105000

What is Vat Payable?

Particulars Amount
Output Vat 5000
Less  
Input Vat 3000
Vat Payable 2000

 

No Input of Service Tax for Vat Dealers
This is because Service Tax is under Central Government and Vat under State Government

In Future
On All bills,both State GST and Central GST will be charged

PARTICULARS AMOUNT AIRTEL
PURCHASES 60000 TELEPHONE 2000
CENTRAL GST 12.5% 7500 CENTRAL GST 12.5% 250
STATE GST 5% 3000 STATE GST 5% 100
GRAND TOTAL 3000 GRAND TOTAL 100

Sales Bill

PARTICULARS AMOUNT
SALES 100000
CENTRAL GST 12.5% 12500
STATE GST 5% 5000
GRAND TOTAL 117500

 

PARTICULARS AMOUNT
SALES 100000
CENTRAL GST 12.5% 12500
STATE GST 5% 5000
GRAND TOTAL 117500

 

Remarks
On Such items,charging both Central and State GST Rates increases the tax burden and compliance cost of filing returns
Hence on such transactions,GST Rates should be reduced or Central GST Should not be charged at all

  1. GST - Goods and Services Tax, India
  2. GST Impact
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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 7 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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