End User Manual

File Name:

Title:
Module

Service Tax Credit / Payable

FI-Service Tax

Release:

ECC 5.0

Overview
Trigger:
Treatment of Service tax credit and the service tax liability
Business Process Description Overview
The service tax credit and the service tax liability can be settled by the following procedure. In the case of service tax credit the same can
be taken only if the payment to the vendor is made and in the case of service tax liability can be settled only if the amount from the
customer is collected. The settlement will be done as a month end process through J2IUN transaction.

Procedural Steps

Procedure for taking service tax credit and the payment of service
tax liabilities:
To avail the service tax credit the following procedure is adapted:-Vendors
For the services to be availed a service order will be prepared specifying the service tax
rate and the E cess on service tax. If no service order exist, the same can be captured
manually also.
When the services are completed the same will be entered through entry sheet (for service
orders).
When the invoice is received the invoice verification will be done through transaction code
MIRO or F-43 (for manual invoice)
While doing the MIRO the service order number will be entered in the reference field
which is mandatory. But in case of non service order cases, the vendor invoice no. must be
entered in the reference field.
The following accounting entry will be passed at MIRO level.
Expenses
Dr
Service Tax Clearing Account 860270 Dr
Ecess on service tax Clearing account860280 Dr
S H Ecess on service tax Clearing account- 860285 Dr
To Vendor A/c

For availing the credit of service tax paid and to adjust against the service tax payable
account the vendor payment should have been made.
The vendor payment will be made through any one of the transaction code F-53.

The service order number or vendor invoice no. already entered during
liability creation will be mentioned in the reference field. Here open
item must be processed using reference field as selection criteria and
putting the same in the reference field.

In the month end a report will be generated by running the transaction. This will show the
service tax amount for which vendors payment has been made in that month.

Last changed on:

08/06/2006

Last changed by
R.Sampath

Version: 1.0

ZFI026.
Page:
1 of 5

End User Manual

File Name:

Title:
Module

Service Tax Credit / Payable

FI-Service Tax

Release:

ECC 5.0

A manual JV will be passed as follows through F-02

Service Tax Credit
Dr
234230
Ecess on Service Tax
Dr
234240
SHEcess on Service Tax
Dr
234245
TO Service tax clearing account
TO Ecess on Service Tax Clearing Account
TO SHEcess on Service Tax Clearing Account

860270
860280
860285

Now the Service tax can be adjusted against service tax payable account if any or else it
can be adjusted against CENVAT payable account while doing the month end utilization
entry. Transaction Code J2IUN

When the services are provided the service tax liability is calculated as follows:-

Customers.
Customer invoice will be raised for the services rendered by the company, mentioning the
service tax and the Ecess on service tax against each invoice.

The accounting entry that will be passed is

Customer Dr
To Service Income
To Service tax on Output Clearing A/C
860250
To Ecess on service Tax Clearing A/C
860260
To SHEcess on service Tax Clearing A/C
860265
When the payment is received from the customer the accounting entry is passed through
transaction code F-28. The invoice number is mentioned in the

which is mandatory.

reference field

As a month end process the service tax clearing account and Ecess on service tax clearing
account will be transferred to service tax payable account (127050) and Ecess payable
account (127060) through transaction code ZFI026. and F-02.
Service tax on Output Clearing A/C Dr
860250
Ecess on service Tax Clearing A/C. Dr
860260
SHEcess on service Tax Clearing A/C. Dr
860265
TO Service Tax Liablity A/C - On Output Service
TO E Cess on output service
TO SHE Cess on output service

127050
127060
127065

Utilization
As a month end process the service tax credit and the service tax payable account are settled
as follows: Transaction Code J2IUN.

Last changed on:

08/06/2006

Last changed by
R.Sampath

Version: 1.0

Page:
2 of 5

End User Manual

File Name:

Title:
Module

Service Tax Credit / Payable

FI-Service Tax

Release:

ECC 5.0

During month end the service tax credit account may be used to adjust the cenvat payable
or service tax payable by selecting the appropriate option in the selection screen in the
transaction J2IUN. The GL account of the service tax credit account and Ecess on service
tax account (234250, 234260 and 234265) are entered and transaction is executed.

In the case of service tax payable, the service tax (127050) and Ecess on Service tax
payable (127060) are entered and the transaction is executed. The service tax payable will
be adjusted against the cenvat / service tax credit account. If no balance is available in
cenvat/service tax credit account the service tax payable will made through TR6 Challan.

Last changed on:

08/06/2006

Last changed by
R.Sampath

Version: 1.0

Page:
3 of 5

End User Manual

File Name:

Last changed on:

08/06/2006

Title:
Module

Service Tax Credit / Payable

FI-Service Tax

Release:

Last changed by
R.Sampath

ECC 5.0

Version: 1.0

Page:
4 of 5