Accounting Treatment of ST when we receive a advance

since ST is taxable on receipt basis. If advance is received then also service tax shall be paid, however if afterwards the service was not actually provided and advance is refunded then, the tax shall be adjusted

Service tax will be payble on Advance receipt.

Thanks for your reply.

please let me know the accounting entries for that.

For Example if we receive advance Rs 10000/- then what entries to be passed in our books of accounts for creating a liability of the service tax upon advance

On receipt of money

Bank ac Dr
  To customer
  To Service tax payable
(accounting of advance)

On payment of service tax

ST payable
  To bank

On rendering of service

Customer
  To Revenue

 

 Sir,

In case of failure to provide the services :-

What will be the accounting entry & Service Tax Treatment ?

If the amount is not refundable to customer then amount is liable to service tax as forfeited advance is in nature of consideration for the service rendered and we would have already paid the service tax on it, no need to pass the separate journal entry.

If the amount is refundable to customber and tax is already then it is the nature of refund of consideration hence we can claim refund of service tax. Accounting treatment is refund the entire amount of payment received from the customer claim the service tax refund from dept or else if any other similar service has been provided to any other customer then we can consider that payment of service tax is for this service