mobilization advance

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This query is : Resolved

vandana (Querist)

07 July 2009 a civil contractor received mobilization advance at an interest of 12% against an equal amount of bank guarantee.
Will service tax be payable on this at the time of receipt or as and when the RA's are raised and this advance is adjusted

CA.Hanumantha Reddy

CA.Hanumantha Reddy (Expert)

07 July 2009 question not clear. Pls give more clarity. Mobilization advance received from whom it is, whether it is from contractee

vandana

vandana (Querist)

08 July 2009 yes the advance has been paid by the contractee and tds has been deducted on it.

CA CS CMA Srinivasan N

CA CS CMA Srinivasan N (Expert)

08 July 2009 Hi
The Service tax is payable on Advance amounts received if the final bill is liable for Service Tax. You can refer this link for detailed info:
https://www.caclubindia.com/forum/messages/2008/8/13117_service_tax_on_advance_money_received.asp

However since its a construction contract, check if mobilization advance is only for Materials or for Labour also. Generally the advance is given for materials.

Rgds

CA.Hanumantha Reddy

CA.Hanumantha Reddy (Expert)

08 July 2009 Yes, service tax is payable on receipt basis. However, you have to analyze the transaction whether it is received for the purpose of providing service or not. Further, either you have opted composition scheme or regular scheme.

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