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At The Time of Adjustment

The document discusses journal entries for various types of taxation - VAT, service tax, excise duty, and TDS - as well as entries related to payroll. For VAT, entries are provided for purchase and sale of materials, adjustment of input and output VAT, and payment. For service tax, entries are given for receiving and providing services, adjustment, and payment. Entries are also outlined for excise duty on purchase and sale of goods. Finally, entries are listed for deducting and paying TDS, booking income, and receiving payment.

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Lavkesh Singh
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270 views4 pages

At The Time of Adjustment

The document discusses journal entries for various types of taxation - VAT, service tax, excise duty, and TDS - as well as entries related to payroll. For VAT, entries are provided for purchase and sale of materials, adjustment of input and output VAT, and payment. For service tax, entries are given for receiving and providing services, adjustment, and payment. Entries are also outlined for excise duty on purchase and sale of goods. Finally, entries are listed for deducting and paying TDS, booking income, and receiving payment.

Uploaded by

Lavkesh Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Accounting Journal Entries for Taxation - Excise, Service Tax, Vat, Tds

We all knows the importance of provision and compute of tax liabilities. Liabilities which may
be monthly/quarterly/half-yearly or yearly basis, accounting journal entries is as equal important for
the same. Here we will see how to make accounting journal entries of for taxation
I Value Added Tax (VAT)
The organizations engaged in Sale and purchase transactions have to pay Vat liability. When they
purchase material Vat is paid on purchases and when they sell material Vat is collected on material.
Vat paid on purchase of material-Input
Vat paid on Sale of Material-Output
Output amount is adjusted with the input and the balance is paid to the department. Entries to be
made are:-

At the time of Purchase of Material
Purchase Dr.
Vat Input Dr
To Creditors
At the time of Sale of Material

Debtors Dr.
To Sales.
To Vat Output..
At the time of Adjustment
Vat Output Dr..
To Vat Input..
To Vat Payable (If Output>Input)

At the time of Payment
Vat Payable Dr..
To Cash/bank

II Service Tax

When services are received:-
Expenses Dr
Service tax Input Dr
To Party

When services are provided
Debtors Dr
To Revenue
To Service tax Output

At the time of Adjustment
Service tax Output Dr.
To Service Tax Input.
To Service tax Payable.

At the time of Payment
Service tax Payable Dr.
To Cash/bank.

III Excise Duty

At the time of Purchase
Purchase Dr..
Central Excise Input Dr..
Education Cess Input Dr.
Secondary and Higher Education Cess Input Dr.
To Creditors

At the time of Sale
Debtors Dr.
Manufacturing Duty (Basic+Education Cess+Secondary & higher education cess) Dr.
To Central Excise Output ..
To Education Cess Output..
To Secondary & higher education cess Output
To Sales (Including excise duty amount)..

IV Tax Deducted At Source
At the time of deducting TDS
Expenses Dr
To TDS Payable.
To Party
At the time of deposit of amount of TDS
TDS Payable Dr
To Cash/Bank

At the time of booking of income
Party Dr.
TDS deducted
To Revenue receipts.

At the time of receipt of Income
Bank/Cash Dr..
To Party..







Journal Entries of Payroll
Payroll means total salary of an employee. When we pay the net salary to any employee, we make the
his or her payroll. Payroll record is necessary because it is the main expense of company. There are
many liabilities like TDS, EPF and ESI which are related to payroll. So, it is made with full of care
because we have to adjust total deductions from the salary in this. We also record all these items with
following journal entries.


1. Pass the journal entry when salary is due.


Basic Salary Debit

Allowances Debit

Company Contribution to EPF Debit

Company Contribution to EPS Debit

Administration Charges to EPF Debit

Company contribution to ESIC Debit

EPF Payable Credit

EPS Payable Credit

ESIC Payable Credit

Professional Tax Payable Credit

TDS Payable Credit

Labour welfare fund Payable Credit

Loan to Employee Credit

Salary Advance to Employee Credit

Rent Recovery Credit

Canteen Expense Credit

Salary Payable Credit


2. Pass the journal entry of the payment of salary.

Salary Payable Debit
Cash/ Bank Credit

Now understand the above journal entry

Basic salary and allowance are the salary expense which go to salary payable and which is paid to
employee at the time of payment of salary. EPF, EPS and ESI contribution will be transferred to their
payable fund accounts. Because all these contribution is also expense, so we have debited the
contribution in these funds. Before transferring to salary payable account, we deduct the TDS and
transfer to TDS payable account. So, TDS payable account will be credited.

You should understand the meaning of above payroll items.

1. EPF = Employees provident fund.


2. EPS = Employees pension scheme

4. ESIC = Employees State Insurance Corporation

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