Dear All,
Plz reply on these ques..
1) Can it be possible that we can adjust service tax liability @ 10% with the same @ 12% ?
2) We have booked our revenue in the last year under 10% service tax head, but now due to some rate revision with customer, we have to issue Credit Notes.
My question is that can we reverse service income of current year with the amount of Credit Notes related to previous year or it be treated as prior period expense/income ?
Thanks
Amit..
if this Credit note relate to prior period to 2011-12 then its effect will not given in the revenue of 2011-12 because prior to 2011-12 service tax liability arise on receipt basis, so there is no any such payment for service tax made for this Credit Note to govt. in prior period.
10% and 12 % are only rate of service tax , its reversal of service tax amount as per rule 6(3) of service tax rules.
As per rule 6(3) "Where an assessee has paid to the credit of Central Government service tax in respect of a taxable service, which is not so provided by him either wholly or partially for any reason, the assessee may adjust the excess service tax so paid by him (calculated on a pro rata basis) against his service tax liability for the subsequent period, if the assessee has refunded the value of taxable service and the service tax thereon to the person from whom it was received."
So if terms agreement has been renegotiated and credit note issued due to this than you can take reversal of service tax.
Regards.
CAclubindia
