Service tax liability on provisional expenses
This query is : Resolved
26 April 2014
i have made provision for manpower expenses for Fy 13-14, but here manpower supplier is individual & i am pvt ltd com.
advice,shold i pay service tax for march 14 or for april 14 under reverse charge.
advice,shold i pay service tax for march 14 or for april 14 under reverse charge.
26 April 2014
as pot 2011 rules can pay s tax in 31st march and paid to day u can pay with 18% interest no of delay days
26 April 2014
The point of taxation is determined in terms of the Point of Taxation Rules, 2011. As per these Rules point of taxation is –
• the time when the invoice for the service provided or agreed to be provided is issued;
• if invoice is not issued within prescribed time period( 30 days except for specified
financial sector where it is 45 days) of completion of provision of service then the
date of completion of service;
• the date of receipt of payment where payment is received before issuance of invoice
or completion of service.
Therefore agreements to provide taxable services will become liable to pay tax only on issuance
of invoice or date of completion of service if invoice is not issued within prescribed period of
completion or on receipt of payment. For specific cases covered under the said Rules,
including continuous supply of service, please refer to the Point of Taxation Rules, 2011.
Hence there is no service tax payable in March. However if invoice is raised in April OR Invoice is not raised upto 30th April, ST would be payable in April. Here I presume that the service has been completed on 31st March.
• the time when the invoice for the service provided or agreed to be provided is issued;
• if invoice is not issued within prescribed time period( 30 days except for specified
financial sector where it is 45 days) of completion of provision of service then the
date of completion of service;
• the date of receipt of payment where payment is received before issuance of invoice
or completion of service.
Therefore agreements to provide taxable services will become liable to pay tax only on issuance
of invoice or date of completion of service if invoice is not issued within prescribed period of
completion or on receipt of payment. For specific cases covered under the said Rules,
including continuous supply of service, please refer to the Point of Taxation Rules, 2011.
Hence there is no service tax payable in March. However if invoice is raised in April OR Invoice is not raised upto 30th April, ST would be payable in April. Here I presume that the service has been completed on 31st March.
CA Sachin D Jain
(Expert)
27 April 2014
Liability on reverse charge basis under point of taxation rules of service tax arises at the time of payment of invoice and not at the time of receipt of invoice. Hence, in ur case the liability to pay service tax will arise in the next financial in the month in which u will make the payment to manpower service provider.
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