Solution of problem relating to service tax on life time membership service

Question Asked by Student

SERVICE TAX ON LIFE TIME MEMBERSHIP

DEAR SIR,

I WANT TO KNOW THE EXACT TREATMENT OF CHARGE OF SERVICE TAX FOR A LIFE TIME MEMBERSHIP. AND ALSO THE ACCOUNTING FOR THE SAME.

WAITING FOR YOUR REPLY
THANKING YOU


Answered by Accounting Teacher

Please tell me about what are you doing

It may change accounting treatment if you become service provider and if you are the service receiver , accounting treatment will differ.
Ist - I assume you are service receiver
For example
I assume that you are buyer of newspaper.

If you are buyer of newspaper and you have paid life member ship fees. Service tax on this is also include in your expenses. Because, I think you have purchased for the purpose of your business.


You can pass journal entry

Life membership fees accounts Dr Net amount 100
Service Tax Account Dr. 10.3

To bank account 110.3

or
Life membership fees accounts Dr Net amount 110.3
To bank account 110.3

2st - I assume you are service provider

1) When service fees of life membership is receivable

Customer Account Debit 110.3
Income of life member ship fees Account Credit ( Net ) 100
Service tax payable account Credit 10.3

At the time of receipt of payment from customer

Bank a/c Dr. 110.3
Customer a/c Cr. 110.3


At the time of payment of service tax

Service Tax Payable a/c Debit 10.3
- Bank a a/c Credit 10.3