Dear Freinds,
Please clear my querry about service tax; now service tax being paid on accrual basis my question is if a bill raised amount of Rs. 10,000 and service tax paid on that bill is Rs.1100 but we received payment later against that bill Rs. 6000 then we loss on tax also. can we adjust or refund this tax difference Rs. 440.
Point of Taxation rules provides for taxation of service providers for taxing service as soon as invoice for service is issued upon completion of service. under service tax, its very likely that ultimately the service recipient does not make full payment of the invoice value or claims refund of payment already made. This may be on account of deficient provision of service or for any other reason / terms stated in contract. Rule 6(3) of service tax rules, 1994 takes care of such eventuality.
In your case, credit on balance unpaid amount can be taken for excess ST paid (after issuance of credit note) This amount can be set off against future tax liability.
However, remember that no credit can be claimed on bad debts because rule 6 (3) does not cover the case of bad debt. ST paid on it will be written off as bad debts.
hope this helps you.
Regards
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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Naveen Fintech Pvt Ltd
Kolkata
CA Inter
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