Service tax rate pot

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 February 2016 We are into consultancy business. We have received 40% of Contract value in August,2015 as Advance at that time rate was 14% and we paid the tax accordingly. Work has completed in December,2015 and invoice raised in January,2016.

Now at what rate income will be booked?

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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13 February 2016 Under the POT Rules the liability for taxation arises on the occurrence of the earliest of these events:
(a) Completion of Service
(b) Issue of Invoice within 30 days of completion of service
(c) Receipt of cash.

In August advance was received and the tax paid thereon. Subsequently on completion of service the Invoice was issued by which time the rate of duty had gone up to 14.5%. As per amended rules the Service Tax should be levied at the prevailing rates. Therefore the invoice will charge ST @ 14.5% and remit the balance of tax on due date.

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