18 February 2016
A bill Rs: 50000/- dated 26/12/2015 from a creditors was received on 30/12/2015 but it was not recorded in books of accounts in (Tally) due to negligence & input of service tax was claimed in same month Dec-15 becoz tax related details was prepared in excel sheet that's why it was skipped to be recorded in Tally. Payment of said bill was made on 11/02/2016. I have few of questions:- Point (1): In case, if Input of service was claimed in a month of bill date of service & payment is made in feb-16. Bill is entered in our books of accounts(in TallY) on invoice date(26/12/15) or payment date(11/02/16)? Point (2): Suppose, if input of service tax was also not taken in the month of bill date 26/12/2015 & payment is made on 11/02/2016. in this case, on which date we can claim input credit of service tax & record bill in our books of accounts?? Point (3): If bill on 26/12/16 recorded in books of accounts on payment date (11/02/16) & input of service is also claimed on payment date(11/02/16). In this case, what would happen?
18 February 2016
Point of Taxation Rules were amended w.e.f.from 01.04.2011 and the mercantile concept of taxation of services came into effect. The same applies pari passu to service tax input. So one can claim ST Input on receipt of the invoice. However w.e.f.1st October 2014, CCR was tweaked and in case the creditor's invoice has not been paid within 180 days of the date of invoice no input credit can be availed. Further under CCR wrong availment and utilization of Input Credit is subject to levy of Penalty.
I am extending the advice I give all my clients. Avail of the Input Credit on receipt of the invoice, but don't utilize it till the creditor is paid off. In other words the credit is availed and carried forward. If per chance the creditor is not paid off within 180 days the availed credit is reversed and only the interest on early availment is payable. Since the credit has not been utilized, no penalty is payable.
Therefore availthe Input Credit in December 2015 itself. Since you have paid off the creditor already, you may even utilize the input credit in December 2015, but since the tax would already have been paid in cash for December 2015, the credit can be utilized for ST payment of February 2016.
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