a) The assessee is partnership firm and the total receipts for the financial year 2013-14 is below Rs 50 lakh and as such he was paying service tax on receipts basis.
b) During the financial year 2014-15, in the first half i.e from april to September 2014, the assessee has also paid service tax on receipts basis.
c) That in the second half the year i.e from October 2014 to March 2015, the total receipts from the business crosses Rs 50lakh and as such he is required to pay service tax on accrual basis.
My query is:-
1) Since the service tax is now payable on accrual basis, do we have to pay service tax on billing done in second half of the year only? ( Oct to March 2014)
2) What about the billing done in previous years for which service tax was paid on receipts basis? Do we have to pay service tax on the difference amount in this half year? ( all services provided till September 2014)
Thanks in advance. We will be highly indebted for the act of kindness.
13 April 2015
You first Consider Firm's gross total turnover of the said year on the basis of invoices issued by firm and then pay service tax on accrual basis on remaining amount after deducting 50 Lac Because Provision does not said that pay tax on reciept basis when reciept is below 50 lac Provision said that first 50 lac gross turnover firm can opt to pay tax on receipt basis
The turnover in all the previous years are below 50 lakh . And we were paying tax on receipt basis. This is the first year where in turnover exceeds 50 lakh. There is slight changes
FACTS OF THE CASE:- a) The assessee is partnership firm and the total turnover for the financial year 2013-14 is below Rs 50 lakh and as such he was paying service tax on receipts basis. b) During the financial year 2014-15, in the first half i.e from april to September 2014, the assessee has also paid service tax on receipts basis since the turnover is below 50 lakh.
c) That in the second half the year i.e from October 2014 to March 2015, the total turnover from the business crosses Rs 50lakh and as such he is required to pay service tax on accrual basis)
. My query is:- 1) Since the service tax is now payable on accrual basis, do we have to pay service tax on billing done in second half of the year only? ( Oct to March 2015)
2) What about the billing done in previous years for which service tax was paid on receipts basis? Do we have to pay service tax on the difference amount in this half year? ( all services provided till September 2014)
14 April 2015
Pl refer third proviso to Rule 6(1) of service tax Rules,1994(refer page 2678 of Ser.Tax By Taxmann 37th Edition By CA SSGupta,which is self explanatory. When the total value of taxable service in the previous was below 50 lacs ,in the current year ,what you have to do is stated clearly there in : ,.... the service provider shall have the option to pay tax on taxable services provided or agreed to be provided by him up to a total of Rs.50 lakhs in the current yr,by the dates specified in this sub-rule with respect to the month or quarter,as the case may be ,in which payment is received. It clearly means that you have to pay for the services provided in this current yr on accrual basis after yr total payment billing exceeds Rs.50 lakhs.
for billing above Rs 50 in current financial year we have to pay tax on accrual basis. and for billing upto Rs 50 lakh limit during the current year we have option to pay tax on cash basis.
1) But what about the billing done in previous years on which service tax is paid on receipts basis and not on accrual basis and amount is still outstanding in books?
2) that means we have to keep bill wise detail of service provided in preceding FY vis a vis receipts . so that service tax can be paid once the outstanding is realized
14 April 2015
If your billing done in First half year(not talking receipt) exceeds Rs. 50 Lac then you have to pay tax on difference amount in this half year Prior to this year you dont have need to worry to pay tax on differences
14 April 2015
Pl.understand it in some other way. we r understandingthepayment position for the current yr only,because the issue of taking benifit of this provision is there in this yr only .as the amount of services for which tax is to be paid have exceed Rs.50 lacs.So in such a case you have tio make the payment on accrual (as per point of taxation RUles,) basis. since you have already availed the facility of Paym,ent on rt basis upto Rs.50 lacs,you can not prolong the earlier invoices by sayingthat for such and asuch invoices i have to pay on rt basis only. Hope it is clear now.
18 April 2015
Sir. Please explain with these figures
1)Service tax payable as on 1.04.2014 for services rendered in preceding years on which service tax is paid on receipts basis. This is outstanding figure of service tax ----------------------------------------------------------------------3 lakh
2)Service tax payable for first half 2014-15 on which service tax is paid on receipts basis( billing april to Sep 2014 is 50 lakh, service tax payble comes out to be 6,15,000/- but paid 4,15,000/- on receipt basis)-------------------------------------------------------------2 lakh
3) Billing for oct to December 40lakh on which Service tax comes out to be 4,94,400/------------------------4.94 lakh
18 April 2015
You need to consider billing Amount of current year only
Therfore due to pay will be 4.94+2
Logic behind this is total taxable turnover(Billing) of the particular year (2014-15) will be seen for the purpose of determinig tax liability once exceed limit in this case Liability=Tax on total blling - tax paid till date
18 April 2015
ok ...thanks but what about 3 lakh outstanding in books when this amount will be paid. that means we have to keep bill wise detail for proceeding years and as and when it is realized st will be due. correct me if i am wrong.
CAclubindia
