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Service tax liablity in case of provision of expensesmade.

sahil (Executive) (102 Points)

22 September 2014

Hi,

We have made a provision for completness of books of accounts as actual bill of vendor not revcieved yet and Supply of manpower expense on which reverse charge is applicable. So my question is wether we have to account for the Service tax liablility on the provision.

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3 Replies

Sangeet Agarwal (Article Assistant) (120 Points)
Replied 22 September 2014

Dear Sahil ji,

In my opinion you shall definately book Service tax for the said expense. The total of Expense/ liability shall be incl. of service tax.

Like for example, when you book Provision for Audit Fees(though it is not reverse charge), you along with the Fees book service tax as well, whether or not you received the bill or even if the audit remains in complete.

Therefore, you shall surely book ST otherwise your true expense will not be recognised as ST too is an expense for you.

Regards,

Sangeet Agarwal

sahil (Executive) (102 Points)
Replied 23 September 2014

Then wether I need to deposit the reverse charge share of ST

Sangeet Agarwal (Article Assistant) (120 Points)
Replied 23 September 2014

Rule 7 of the Point of Taxation Rules 2011 says that if the payment is made within 6 months of the date of invoice then Point of Taxation shall be the date on which the payment is made. But if payment is not made within 6 months then point of taxation shall be determined by Rule 3 of the Point of Taxation Rules 2011. Since, in your case there is no invoice, you dont have to make any payment on RCM basis.