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Liability to pay service tax

Neha. (Article Clerk) (71 Points)

17 November 2009

when does our liability to pay service tax arises? when we receive a cheque or when we get it cleared? Is it cheque received subject to realisation?

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2 Replies

Shweta (Audit executive and CA FINAL) (90 Points)
Replied 18 November 2009

Service tax liability will be created on the day of cheque date.. whether u deposit or not..

Satish (CA Final Student) (479 Points)
Replied 24 November 2009

Hi Neha,

There is no clarification in this regard from department. The liability arises only on receipt. But on safer side it is advisable pay service tax once the cheque gets realised in the bank. It is not difficult to justify the date of receipt as the date of clearing. If the cheque is dishonoured then the service tax paid on receipt of cheque can be adjusted against future liability. So both the way you can pay the liability.