Whether Service Tax applicable on advance payment

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We have to raise service bill towards 10% advance payment for erection & commissioning.  Whether we have to add service tax 10.3% for the advance payment?  Any notification is there in this regard?

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It's better that you do , otherwise the amount of service tax will be grossed up. 

 

Essentially, service tax is taxable on receipt/cash basis rather than accrual basis, so even if you are going to provide service in the future and you're charging the amount now (say as advance), it will be taxable as soon as  you get the receipt. In such a case, charging service tax on the invoice for advance payment would be wiser.


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