Service tax applicability

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 July 2012 Dear Expert,

I have 2 queries w.r.t service tax

1. In case of an individual who is a practicing advocate, is the advocate exempt from charging service tax to its clients from 1st July 2012 onwards while raising the service invoices?

2. Earlier service tax was payable to the CBEC when the invoices were raised were raised on the clients and sales entry passed in the books of account. However, has the provision being changed from 1/7/2012 wherein service tax is payable to CBEC on receipt of payment from the client?

Kindly advise.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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10 July 2012 W.e. f 01st July 2012-
An individual as an advocate or a partnership firm of advocates by way of legal services to,-
(i) an advocate or partnership firm of advocates providing legal services ;
(ii) any person other than a business entity; or
(iii) a business entity with a turnover up to rupees ten lakh in the preceding
financial year

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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10 July 2012 In respect of services provided to business entities, with a turnover exceeding rupees ten lakh in the preceding financial year, tax is required to be paid on reverse charge by the business entities. Business entity is defined in section 65B of the Finance Act, 1994
as ‘any person ordinarily carrying out any activity relating to industry, commerce or any other business or profession’. Thus it includes sole proprietors as well. The business entity can, however, take input tax credit of such tax paid in terms of Cenvat Credit Rules, 2004, if otherwise
eligible. The provisions relating to arbitral tribunal are also on similar lines.

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CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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10 July 2012 Service tax is to be paid to the government on receipt basis only by individual, partership firms and proprietorship firm only.