Hello Friends...
One of my client receives earnest money deposit from contractors and in some cases such deposits are forfeited. Will such forfeiture amount to consideration for an activity liable for service tax payment?
Saurabh Agarwal (Partner) (38 Points)
09 July 2012Hello Friends...
One of my client receives earnest money deposit from contractors and in some cases such deposits are forfeited. Will such forfeiture amount to consideration for an activity liable for service tax payment?
CA sawan kumar
(senior associate)
(154 Points)
Replied 09 July 2012
Since service becomes taxable on an agreement to provide a service such forfeited deposits would represent consideration for the agreement that was entered into for provision of services. Hence forfeiture would amount to to consideration for an activity liable for service tax payment.
CAclubindia
