Payment of Service Tax on cash basis:
Individuals, proprietary concerns, partnership firms, Limited Liability Partnerships (but not HUFs) whose total value of taxable service is Rs.50 Lakhs or less in the previous financial year can opt to pay service tax on receipt basis instead of accrual basis. For example, Mr. Provider raises an Invoice for Rs.50,000 towards services for the month of Feb 2015. He can pay service tax on this amount, only after he gets the money from the receiver. Suppose, the receiver defaults in tax payment, Mr. Provider neednï¿½t pay service tax.
I.e. If the service provider is an individual, proprietorship firm, LLP or partnership firm then it is optional for the service provider to pay service tax on receipt basis. But in case of company and HUF and others, it is mandatory to pay service tax on accrual or receipt basis whichever is earlier.. So plan accordingly..