Service Tax Remittance on bills

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Govindarajan. s. (Querist)
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30 April 2011 We are an Construction company. Till 31.03.2011 we paid Service Tax against realisation of payment.

I came to know that w.e.f. 1.4.2011 the ST to be payable against raise the Bill/Invoice. Kindly clarify me with notification no. for this type of rule amendment by Service Tax Authorities.

Also let me know the outstanding ST as on 31.03.2011 (i.e., previous method of ST remittance against realisation). In which method we have remit the Service Tax.

Clear advise is requested to make the necessary method to prepare the remittance details for the month Apr. '11.

Thanks for your advise, well in advance.

Govindarajan. S.

srinivasan

srinivasan (Expert)
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30 April 2011 Construction services would fall under the contineous supply of services.

The point of taxation rules 2011 Notfn. no. 18/2011 dt. 1.3.2011 ST Rule No.6 ammended by 25/2011 ST dt 31.3.2011 defines contineous supply of services. Your service tax liability would be determined based on :-
1. Completion of an event as mentioned in the contract for which the payment is received or to be received. (Therefore it may cover even if an activity is billable as per contract but is not billed!!)
2. in case if you receive any advances date of receipt of advance would be deemed to be the date of provision of service for the purpose of this rule.

Effectively, your service tax liabilty will be as per your billing schedule or the receipt of payments which ever is earlier.

However, transition provision has been given in Rule 9 which states that the above rules will not apply upto June 2011.for those cases where the service is provided or invoice is raised before 30th june 2011.

Therefore, you can follow the exisisting practice of payment of service tax based on receipts upto June 2011 and shift to the new provisions from July'11.

The main point is that you should plan to have prpoer systems and controls in place before end of June 2011 as thereafter the new rules will be applicable.

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