payment of service tax

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Akash (Querist)

10 August 2010 hello...
i have an query..

can a company adopt mercantile basis for payment of service tax?

Thanks & Regards,
Akash.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

10 August 2010
My view, there is no restriction on paying Service tax on accural basis.

I keep open for other experts opinion also

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CA SMR

CA SMR (Expert)

10 August 2010 Yes. With effect from 1-3-2008, a new provision 6(1A) has been incorporated in Service Tax Rules, 1994, whereby service tax can be paid in advance to the credit of the central government and adjust the amount so paid against the service tax which he is liable to pay for the subsequent period. This according to me cover paying service tax on accrual basis.

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VINOD ARORA

VINOD ARORA (Expert)

15 August 2010 for payment of service tax on accrual basis, there is no problem but you cant take cenvat/input credit on mercantile basis as the same are linked with your payments to vendor/service provider.

in fact service tax on services provided to group companies is now a days payable on mercantile basis irrespective of status of receipt of payment, meaning thereby that partly accrual system is getting into the service tax mechanism as well.

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Akash

Akash (Querist)

16 August 2010 Thanks a lot 2 u all...
it means that there is no restriction on payment of Service tax on accrual basis...but u can take credit of only that much amt. for which u have made the payment..

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