liability of service tax in case of advance payments

Hi

Liability of payment of service tax arises on payment basis and not on due basis.

Hence in both the cases i.e., (actual payment agt. bill & advance payment) you need to pay the service tax in the following month upto 5th after making the payment.

regards

thanks shashi for your response, Further i would like to clarify few practical aspects of the same... suppose if an advance of Rs.50000 is given to a transporter and the builty is still to be recieved then S.T shall be charged on this 50000 i.e. 10.3% of Rs 50000?? if yes, then at the time when the builty is recieved say of Rs.40000 then wat will be the treatment (since the service tax has been deducted on 50000 instead of 40000)

Hi

You can adjust the balance payment of service tax i.e., 10.3% of Rs 10000/- agt. service tax payable agt. other bills for the same period.

Shashi is right

its all accounting clarity

if u keep the payment in "advance to suppliers" then no tax liability unless the invoice is submitted and journal entry is made from advance account to service provider's account, 

but 

if u keep the payment posted as "freight or carrige" on the date of payment, then u have to take invoice for full consideration either in one or in parts, otherwise ur accounts will not be completed. 

 

service tax liablity is on payment under GTA head only,

thanks!!

Hi, Can anybody tell what is the treatment of "ADVANCE" received from client, whether we booked Service Tax on ADVANCE PAYMENT RECEIVED agt. future billing.

Hi Yogesh

 

Service tax needs to be paid agt. advance payment received agt. services, as liability of service tax payment is on receipt basis and your liability arises as soon as you receive the payment. 

Kindly Solve my problem... We have paid Rs.30 lacs to our transporter as advance for transportation charges. And did agreement with them to deduct the amount of advance in every month in 5 equal installments from their monthly bills.

Say, if in any month transporter raised bill to us Rs.15 lacs, then we deduct Rs.6 lacs from their bill and paid the balance amount. So, what will be the tax implication on that. How will we pay the GTA Service Tax ?

We paid the advance in October 2014.

Please advice on urgent basis.

 

Waiting for prompt reply please.

 

   

please refer rule 7 of point of taxation rules.