Service tax payable receipt basis or bill basis

This query is : Resolved

sasi dass (Querist)
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25 March 2016 Sir,
Our Company raised Rent Invoice for the period from Oct15 to Dec 15 Rs.50,000/- pm on 21.01.2016,but, we have received service tax portion on March 2016. Please clarify that it is come under 3rd Quarter or 4th Quarter. If any interest is payable by us?

SASI B M
ACCT

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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25 March 2016 Usually rent agreements have a clause as to when the rent is to be paid and for what period. Rent is usually paid in advance i.e. for the month of March 2016, the payment would be made by say 7th March 2016. The rent paid in March is for March and not for February.

Further as per Service Tax rules, the liability to pay service tax arises when the invoice is issued. If your invoice has been issued in the third quarter and you are not a body corporate, the service tax is payable by 6th January irrespective of whether you have received the payment or not. Therefore your liability is payable for third quarter and interest on delayed payment should be calculated as per law.

In case you are a body corporate your Service tax is payable monthly and hence compute interest accordingly.

sasi dass

sasi dass (Querist)
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28 March 2016 But, our Invoice is raised on Jan.2016 for 4 months Rent is create liable for Service Tax Late payment Interest.
Note:
Rent Agreement is not written at the time tenant comes to occupy, Thereafter, it is made on Jan.2016.

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Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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28 March 2016 Since there was no Rent agreement prior t January 2016, you have not issued any invoice. However, if you have received any amount as rent, then you are liable for service tax on the earlier of the invoice date or receipt of consideration, and the liability arises on the day you received the rent. If the rent is received after the invoice date - then you are liable from the invoice date.

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