Service tax ( cash basis)

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Anish Gupta (Querist)
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20 August 2017 A Chartered Accountant firm is paying Service Tax on receipt basis as the turnover is below Rs. 50 Lakhs in previous year. What will be the treatment of payments received after 01st July, 2017; invoices for the same have been raised before 30th June, 2017? How to file return (Service Tax/GST) in above case?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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20 August 2017 Pay service tax and revise ST 3.inclding the payment.

Anish Gupta

Anish Gupta (Querist)
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21 August 2017 Payments received in July, 2017; how to revise the Service Tax Return (For April to June 2017) already filed in July 2017

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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24 July 2025 Got it! Here’s how the service tax on **cash basis** works and what you need to do for your CA firm in this scenario (below Rs. 50 Lakhs turnover):

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### Context:

* The firm is paying **service tax on receipt basis** (cash basis accounting), allowed for service providers with turnover below Rs. 50 lakh.
* Invoice(s) were raised **before 30 June 2017** but payment received **after 1 July 2017**.
* You want to know how to treat these payments and file/revise service tax returns.

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### Key Points:

1. **Service Tax on Receipt Basis** (Cash Basis Accounting)

* Service tax is payable only when payment is received, not on invoice date.
* So, for invoices raised before 30 June 2017, if payment is received after 1 July 2017, service tax is to be paid **in the period when payment is actually received** (i.e., July onwards).

2. **Return Filing for April-June 2017 (Quarterly Return ST-3)**

* Since the payment was **not received by 30 June 2017**, service tax was not payable for April-June quarter on these invoices.
* So you **do not need to revise the return for April-June 2017** (no service tax liability on unpaid invoices).

3. **Return Filing for July-September 2017**

* You should pay the service tax on the amount received in July 2017 **in the July-September quarter**.
* Include this payment in the return for July-September (ST-3 return).
* If you had already filed the return for April-June 2017 showing zero service tax on those invoices, no revision is necessary.

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### Summary:

| Invoice Raised | Payment Received | Tax Liability On | Return Filing |
| ------------------ | ---------------- | ----------------------------------- | ------------------------------------------------------------------------ |
| Before 30 Jun 2017 | After 1 Jul 2017 | July-September quarter (on receipt) | No revision of April-June return needed. Pay & report in July-Sep return |

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### Additional Notes:

* If you had erroneously declared tax on invoice date basis in April-June return, you will need to revise it to adjust for cash basis.
* Cash basis accounting must be consistently followed.
* After GST implementation (from 1 July 2017), the cash basis rules are different, but since your question is about service tax, the above applies.

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If you want, I can help you draft a simple revision letter or guide you with the exact steps in ST-3 revision filing. Would you like that?

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