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Accounting Treatment of KKC (Krishi Kalyan Cess)

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Accounting Treatment of KKC (Krishi Kalyan Cess). Check Accounting Entries for Krishi Kalyan Cess. Check Journal Entries and Adjustments related to KKC (Krishi Kalyan Cess). In this article we provide complete details for Accounting Entries of KKC with Empales and Various Case Laws. Now Scroll down below n check more details for “Accounting Treatment of KKC (Krishi Kalyan Cess)”

Accounting Treatment of KKC (Krishi Kalyan Cess)

Accounting Treatment: Now we will discuss the accounting entries under the following possible heads where service tax Is charged under different value in the books of B Limited.

Case A. Where service tax is charge at full rate on 100% bill value by A Ltd. Example – Erection service, consulting engineering service. etc. Output Invoices is also raised by B Ltd at full rate on 100%

B. Where service tax is charged at full rate on 40% value on bill amount by A Ltd to B Ltd . Example, Work Contracts for originals works. Output Invoices raises by B Limited on full value / abated value

C. Where service tax is charged at full rate on 70% value on bill amount by A Ltd to B Ltd. Example, Work Contracts for other than original works ( Annual Maintenance service contract)

D. Where service tax is charged at full rate on 30% value of service. Example, Transport of goods by road services (GTA)

E. Service tax calculated on 100% value but payable by the recipient of service. Example, Legal Services

F. Service Tax calculated on abated value (40%) and 50% ST to be charged by the provider of services and balance 50% on ST to be paid by recipient of service. Example Work contract service provided by a non corporate entity to B Ltd

G. Service tax is calculated under Reverse charge on 40% value and recipient has to pay 100% of Service tax. Example, Rent a cab service provided by an non corporate entity to B Ltd.

Case A : Let us take an example. Value of input service received by B Ltd from A Ltd is Rs 10000. ST rate 14%. SBC-0.5%. KKC – 0.5%. B Ltd raises Output Invoices for Rs 20000. rate of tax is same.

Books of B Ltd
i) For booking of Expenses Dr (Rs) Cr (Rs)
Expense A/C Dr 10000 Expenses booked
Service Tax A/C Dr 1400 ST amount 14% on 100% value
SBC A/C Dr 50 SBC 0.5% on 100% value
KKC A/C Dr 50 KKC o.5% on 100% value
 To A Ltd A/C 11500 Gross Bill Value
ii) For booking of Income
Customer A/C Dr 23000 Gross Bill Value
To Sales A/C 20000 Income booked
To ST Payable A/C 2800 ST liability on 100% value at 14%
To SBC Payable A/C 100 SBC payable.0.5% on 100% value
To KKC Payable A/C 100 KKC Payable. 0.5% on 100% Value
iii) Discharge of KKC Output Liability.
Firstly, KKC input credit of Rs 50 will be utilized to pay the output liability
and the balance amount of Rs 50 ( 100-50) will be paid through cash. Normally a separate
account is created for such adjustment and payment of KKC. Let KKC Adjustment A/C
is opened and following entries will be made for adjustment and payment
iii)(a) Transfer of KKC output Liability
KKC Payable A/C DR 100
To KKC adjustment A/C 100
iii)(b) Transfer of KKC input credit    
KKC adjustment A/C 50
To KKC A/C Dr 50
iii) ( c )Payment of balance amount in cash    
KKC adjustment A/C Dr 50
To Bank A/c 50

Other Important Points:

In all the situations, KKC adjustments will be like this and will not be discussed in subsequent discussions of all other cases.

There should not be ‘Credit’ balance in KKC adjustment account at the month end. Cr balance represents the undercharged liability and should be discharged immediately

As Cenvat Credit is not available for SBC, SBC liability to be discharged in cash and SBC on input to be charged to Revenue

Case B and F : Consider the previous example where original works provided by A Ltd / Mr A ( Non corporate entity)

Accounting Treatment of KKC Case B And F

Accounting Treatment of KKC IMG 1Accounting Treatment of KKC IMG 2

Case C : All are same like above. ST ,SBC and KKC to be calculated on 70% value

Case D : GTA Service : In this case , Recipient of the service is to bear the Service Tax under Reverse Charge. Value for this purpose is 30% on the Invoice Value. Status ( corporate or non corporate) of the service provided is immaterial.

Example : A Ltd provide the GTA service to B Ltd .Value of service is Rs 100000. A Ltd will raise a bill for Rs 100000 and the Service tax on 30% value to be borne by B Ltd. Journal Entry will be as follows.

Accounting Treatment of KKC IMG 3

Case E : Service tax calculated on 100% value but payable by the recipient of service. Example, Legal Services : Journal entries will be same as case D above. ST, SBC and KKC will be calculated on 100% value

Case F : Service tax is calculated under Reverse charge on 40% value and recipient has to pay 100% of Service tax : Journal entries will be same as case D above. ST, SBC and KKC will be calculated on 40% value.

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About Raju Choudhary

Article by Raju Choudhary Raju has written 537 articles. If you like This post, you can follow CAknowledge on Twitter. Subscribe to CAknowledge feed via RSS or EMAIL to receive instant updates.

One comment

  1. For a manufacturer credit of both KKC and SBC is not available. So pls discuss entry in situation where the co has received a service under full reverse charge (wud be better if discuss partial reverse also) Say service is security of guard service or manpower service.

    EX 2 professional service provided by advocate is also under reverse chg (turnover >10 lac). Also tds is deductile. So passs entry with tds also for a mfg co.

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