GTA & Partnership Firm & ST Liability
This query is : Resolved
07 February 2010
Dear Friends,
Need clarification on the following queries
1) A firm bein service receiver of goods transport via road service need to register and pay ST. Being unaware of such provision never made arrangements for such ST payment. subsequently aft registration how to compute of such and remit? can batement of 75% be had? will the whole ST be expense to firm as same cant be recovered from the GTA provider or on his ST portion.
2) need clarification like havent made arrangement for ST and now have to file ST means how to adjust the same? should the firm bare it as expense?
3) Had the GTA was regular ST payer and filed their returns and now the firm subsequent to its regist also pays wont it be double payment of ST for same service?
4) wat is current Interest rate for delay in ST remitance. plz give section or notification No. for the same
Need clarification on the following queries
1) A firm bein service receiver of goods transport via road service need to register and pay ST. Being unaware of such provision never made arrangements for such ST payment. subsequently aft registration how to compute of such and remit? can batement of 75% be had? will the whole ST be expense to firm as same cant be recovered from the GTA provider or on his ST portion.
2) need clarification like havent made arrangement for ST and now have to file ST means how to adjust the same? should the firm bare it as expense?
3) Had the GTA was regular ST payer and filed their returns and now the firm subsequent to its regist also pays wont it be double payment of ST for same service?
4) wat is current Interest rate for delay in ST remitance. plz give section or notification No. for the same
08 February 2010
Following are the answers for your queries -
1)Firm needs to compute the tax payable from the date the firm has obtained registration and as per the limits prescribed in the Law i.e. if the vehicle is fully loaded with your goods then on the transport receipts of more than Rs. 1500/- and in other cases on the transport receipts of more than Rs. 750/-.
The abatement of 75% can be availed only if the service provider is not availing any CENVAT credit.But normally such information is not available with the assessee so 75% abatement can be availed.
2)Being the service receiver, if the assessee is not utilising the said goods transport service as input service for any output service or for manufacturing activity, the service tax paid should form part of expenses of the Firm.
3)As per the definition of the person liable to pay tax under GTA service is "the person making the payment of transport charges whether consignor or consignee is any of the person mentioned then such consignor or consignee as the case may be is required to pay the tax". So it is advisable that the Firm should ask the GTA that service tax on the transport charges paid to such GTA will be born by the Firm.
4)The current interest rate for delay in ST remittance is 13%p.a. for the number of days delay.
1)Firm needs to compute the tax payable from the date the firm has obtained registration and as per the limits prescribed in the Law i.e. if the vehicle is fully loaded with your goods then on the transport receipts of more than Rs. 1500/- and in other cases on the transport receipts of more than Rs. 750/-.
The abatement of 75% can be availed only if the service provider is not availing any CENVAT credit.But normally such information is not available with the assessee so 75% abatement can be availed.
2)Being the service receiver, if the assessee is not utilising the said goods transport service as input service for any output service or for manufacturing activity, the service tax paid should form part of expenses of the Firm.
3)As per the definition of the person liable to pay tax under GTA service is "the person making the payment of transport charges whether consignor or consignee is any of the person mentioned then such consignor or consignee as the case may be is required to pay the tax". So it is advisable that the Firm should ask the GTA that service tax on the transport charges paid to such GTA will be born by the Firm.
4)The current interest rate for delay in ST remittance is 13%p.a. for the number of days delay.
09 February 2010
Thx jigar/
can u explain wat u mean by
pt No. 2 - input service for any output service or for manufacturing activity, the service tax paid should form part of expenses of the Firm.
Also need to know that so prior to registration period no filing be made or no liability be computed? say regist made in oct 2009. wat abt for half yr ended till sept 2009?
can u explain wat u mean by
pt No. 2 - input service for any output service or for manufacturing activity, the service tax paid should form part of expenses of the Firm.
Also need to know that so prior to registration period no filing be made or no liability be computed? say regist made in oct 2009. wat abt for half yr ended till sept 2009?
27 July 2024
Let's break down the points related to input service tax and registration under the Service Tax regime:
### **1. Input Service Tax Treatment**
#### **A. Input Service for Manufacturing or Output Service**
1. **Service Tax on Input Services**:
- **Definition**: Input service refers to any service used by a business for its activities that are related to manufacturing, or providing output services. This includes services that are directly or indirectly used in the production or supply of goods and services.
2. **Accounting for Input Service Tax**:
- **Part of Expenses**: When service tax is paid on input services, this tax should be treated as part of the cost of those services. For a manufacturing firm, the service tax paid on input services should be included in the cost of production or manufacturing expenses. Similarly, for service providers, the service tax on input services should be included in the expenses related to providing output services.
- **Credit Utilization**: Under the Service Tax regime, businesses could claim credit for the service tax paid on input services, which could be used to offset the service tax payable on output services or goods. This credit was a way to reduce the overall tax burden.
#### **B. Treatment in Financial Statements**
- **Expenses**: The service tax on input services, if not claimed as credit, should be accounted for as part of the expenses in the financial statements. For example, if a manufacturing firm pays service tax on services related to production, this should be included in the cost of goods sold or manufacturing expenses.
### **2. Pre-Registration Period and Filing**
#### **A. Pre-Registration Period**
1. **Service Tax Registration and Liability**:
- **Registration Date**: If a firm gets registered for service tax from a certain date (e.g., October 2009), it means that from this date onwards, it is required to comply with service tax regulations, including collecting and paying service tax on taxable services and claiming input service tax credit.
2. **Pre-Registration Period**:
- **No Liability for Past Period**: For the period before registration (e.g., from April 2009 to September 2009), the firm generally does not have a legal obligation to pay service tax or file returns if it was not registered during that time. The service tax registration and related compliance obligations only apply from the date of registration.
- **No Filing Required**: For periods before registration, no service tax filings are required, and there is no liability to compute for service tax. The firm should focus on compliance from the date of registration onward.
#### **B. Transition to Post-Registration**
1. **Filing and Compliance Post-Registration**:
- **Post-Registration**: From the registration date (October 2009 in your example), the firm must start filing service tax returns and comply with all relevant regulations, including paying service tax on taxable services and claiming input service tax credits.
2. **Accounting for Service Tax**:
- **Record Keeping**: Ensure proper accounting and record-keeping for service tax transactions post-registration. Maintain records of input service tax paid and output service tax collected to facilitate accurate return filing and credit claims.
### **Summary**
- **Input Service Tax**: Service tax paid on input services should be accounted for as part of the firm's expenses or claimed as credit, depending on the service tax regime.
- **Pre-Registration**: No service tax filing or liability needs to be computed for the period before registration. Compliance with service tax regulations starts from the date of registration.
If you have specific concerns or need further details related to the transition between pre-registration and post-registration periods, or if there are other nuances to your situation, consulting a tax advisor or service tax consultant is advisable. They can provide tailored advice and ensure compliance with all applicable regulations.
### **1. Input Service Tax Treatment**
#### **A. Input Service for Manufacturing or Output Service**
1. **Service Tax on Input Services**:
- **Definition**: Input service refers to any service used by a business for its activities that are related to manufacturing, or providing output services. This includes services that are directly or indirectly used in the production or supply of goods and services.
2. **Accounting for Input Service Tax**:
- **Part of Expenses**: When service tax is paid on input services, this tax should be treated as part of the cost of those services. For a manufacturing firm, the service tax paid on input services should be included in the cost of production or manufacturing expenses. Similarly, for service providers, the service tax on input services should be included in the expenses related to providing output services.
- **Credit Utilization**: Under the Service Tax regime, businesses could claim credit for the service tax paid on input services, which could be used to offset the service tax payable on output services or goods. This credit was a way to reduce the overall tax burden.
#### **B. Treatment in Financial Statements**
- **Expenses**: The service tax on input services, if not claimed as credit, should be accounted for as part of the expenses in the financial statements. For example, if a manufacturing firm pays service tax on services related to production, this should be included in the cost of goods sold or manufacturing expenses.
### **2. Pre-Registration Period and Filing**
#### **A. Pre-Registration Period**
1. **Service Tax Registration and Liability**:
- **Registration Date**: If a firm gets registered for service tax from a certain date (e.g., October 2009), it means that from this date onwards, it is required to comply with service tax regulations, including collecting and paying service tax on taxable services and claiming input service tax credit.
2. **Pre-Registration Period**:
- **No Liability for Past Period**: For the period before registration (e.g., from April 2009 to September 2009), the firm generally does not have a legal obligation to pay service tax or file returns if it was not registered during that time. The service tax registration and related compliance obligations only apply from the date of registration.
- **No Filing Required**: For periods before registration, no service tax filings are required, and there is no liability to compute for service tax. The firm should focus on compliance from the date of registration onward.
#### **B. Transition to Post-Registration**
1. **Filing and Compliance Post-Registration**:
- **Post-Registration**: From the registration date (October 2009 in your example), the firm must start filing service tax returns and comply with all relevant regulations, including paying service tax on taxable services and claiming input service tax credits.
2. **Accounting for Service Tax**:
- **Record Keeping**: Ensure proper accounting and record-keeping for service tax transactions post-registration. Maintain records of input service tax paid and output service tax collected to facilitate accurate return filing and credit claims.
### **Summary**
- **Input Service Tax**: Service tax paid on input services should be accounted for as part of the firm's expenses or claimed as credit, depending on the service tax regime.
- **Pre-Registration**: No service tax filing or liability needs to be computed for the period before registration. Compliance with service tax regulations starts from the date of registration.
If you have specific concerns or need further details related to the transition between pre-registration and post-registration periods, or if there are other nuances to your situation, consulting a tax advisor or service tax consultant is advisable. They can provide tailored advice and ensure compliance with all applicable regulations.
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