Calculation for payment of service tax

This query is : Resolved

CA Ashwani Agarwal (Querist)
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01 August 2011 As we know that Point of Taxation has been changed from 01.07.2011.

So now how to tell the tax to the assessee.

Suppose assessee had taken advance of Rs. 500000 on a service in July. So he will deposit 51500 on the same in july.

Now if he receives final payment in december, then he will pay tax on the balance.

The problem here is that if i am collecting 500000 as advance payment then whether it should be considered as inclusive of service tax or not. And if yes then the receipt that the assessee will give to his client. How will he show service tax on the same.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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01 August 2011 Notification dt: 1st March, 2011
No. 18/2011 Clause

(a) a provision of service shall be treated as having taken place at the time when service is
provided or to be provided; and
(b) if, before the time specified in clause (a), the person providing the service issues an invoice
or receives a payment, the service shall, to the extent covered by the invoice or the payment
made thereof, be deemed to have been provided at the time the invoice was issued or the
payment was received, as the case may be, whichever is earlier.

as per clause b, if you received the amount need to be pay service tax on receipt itself. so what ever amount you received back calculate the service tax and pay