How to adjust service tax paid on advance amount received ?

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 October 2013 Hello,

I have client who has paid service tax on advance amount received (assume in Oct-march 2013 return).
Now,in current period i.e.April-Sept 2013,he has raised bill for the same.
So,where to show such amount, which is paid earlier.

CA Pradeep Sharma

CA Pradeep Sharma (Expert)
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24 October 2013 There is no need to show such amount in current period return.

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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27 October 2013 Theoretically the experts answer is correct, but in the commercial world practice is different. Suppose the contract is for Rs.10 lakhs plus service tax - Rs.11,23,600/-. If 100 % advance is received, which is usually in a round figure, say Rs.10,00,000/- would have been received. The ST - 3 would then show that advance received is Rs.8,89,996/- on which Service Tax would come to Rs.1,10,004/- which would equal Rs.10,00,000/-. The invoice including service tax would be Rs.11,23,600/-. Hence in the current period in the month of invoice issued Rs.1,10,004/- should be shown as the service rendered and Rs.13,596/- as service tax payable/paid.

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