Service Tax program

Question

Hi
As per service tax rules, service tax needs to be paid to government only when th amount is received from customer. So at the time of booking invoice, credit must go to service tax interim account and not service tax payable account. Similarly in case of advance, we need to pay service tax once the amount is received even though invoice is not billed to customer.
Let me know how to handle this.

Answer 1

Dear
As per my  understanding,  when an invoice is created the entry is
Customer A/c Dr  xxxx
Income A/c     Cr  xxxx
Service Tax A/c Cr xxxx
Now you want to assign Service Tax Clearing Account in the above entry.   Upto that stage it is OK.  Then when you receive Service Tax amount from Customer naturally you give credit to Customer Account since billing is already done for service tax and here you cannot give credit to clearing account.   Then by assigning/giving above clearing account does not serve our purpose.
In my view it is better not to debit Customer at all at the first instance with service tax amount. 
So when you receive service tax amount, directly you can give credit to Service Tax payable account from where you can pay to the authorities.
Regards