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About service tax

Amit kr Jha (Student) (39 Points)

10 June 2016

How service tax imposed in o/s bills after 1st june & new bills ? What effect its on books of account? how calculate it? please explain it.

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CA Anant Tyagi (CA) (283 Points)
Replied 10 June 2016

Dear Amit

In case of new levy of rate, hereinafter termed as Krishi Kalyan Cess (KKC), under service tax Law, then-

As per rule 5 of Point of Taxation Rules 2011 –

No Tax shall be payable to the extent the invoice has been issued and the payment received against such invoice before such new levy i.e. KKC.
No tax shall be payable if the payment has been received before the service becomes taxable and invoice has been issued with 14 days of the date when the service is taxed for the first time.

Now answer to your question as per above law–

Imposition of service tax after 1st June?

Answer –

Rate of 14.5% of service tax shall be applicable in case invoice and payment has been received before 1st June

Rate of 14.5% of service tax shall be applicable in case payment has been received before 1st June and invoice has been issued before 14th June.

Rate of 15% shall be applicable in all other cases.

Effect on Books of account?

Answer –

Book the credit of KKC in books of account @ .5% (New Levy) It can be adjusted against only output liability of KKC.

Can’t book the credit of Swachh Bharat Cess @ .5% (levied on 15.11.2015).

Book the credit of other tax liability i.e.14% (Basic Service Tax Liability)

Calculation of Additional rate of .5%.

Answer – It is computed on the Taxable value of service not on the basic service tax @ 14%. Just like Swachh Bharat CESS.

1 Like

Chirag Parmar (Service) (65 Points)
Replied 10 June 2016

If invoices are outstanding for the services provided and of which service tax has or has not been deposited by the service provider with department before 01-06-2016 then KKC is required to be be deposited with the department under rule 5 of the POT, 2011 although it is not specified in invoices issued.

In case of invoices raised on or after 01-06-2016, KKC would be required to be charged separately in the each invoices issued.

From the acounting of point of view, it is suggested that the new head of KKC under receivable/payable may be created. However, it is pertinent to mention that credit of KKC shall be utilised against the payment of KKC only.

Further, KKC shall be calculated at 0.50% of the value of services. In case of abatement, it would be calculated proportionately.

karan jit singh (Consultant) (1299 Points)
Replied 10 June 2016

Originally posted by : Amit kr Jha
	How service tax imposed in o/s bills after 1st june & new bills ? What effect its on books of account? how calculate it? please explain it.