Service tax query

Dear All,

1. Service tax is to be paid as per point of taxation i.e as per invoice if payment is not received. However in case of assesses where service tax is to be paid on receipt basis (50 Lakhs or less in previous financial year), then in that case will service tax be paid if payment is not received? Is there any time period for non payment?

2. Also for the month of march, liabilty to be discharged by march 31st. What if subsequently payment is not received?

3. If service receiver does not pay service tax seperately, then amount should be considered as inclusive of service tax?

Regards, 

 

Replies (1)

For point no. 1: the option to pay service tax on receipt basis is available till value of taxable service does not exceed Rs. 50 lakhs in current year. As and when it exceeds 50 lakhs, POT rules shall be applicable. In my opinion, since service tax is payable in the month of receipt of payment, so no service tax will be payable if no amount is received from service receiver.

For point no. 2: service tax is paid by service provider for rendereing services. It is paid even on bad debts. Hence, even if payment is not received subsequent to provision of service, service tax shall still be payable. This is the case for any month.

For Point no. 3: service provider shall not be liable for service tax not recovered from client. The liabilites of service provider and service receiver are independent of each other. Hence, where service receiver does not pay tax, then amount received by service provider shall not be considered as inclusive of service tax

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