Payment of service tax on receipt basis

This query is : Resolved

Sai Sundar (Querist)
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08 July 2013 Dear Experts

I am pursuing my CA course undergoing my Articleship tenure currently.

I would be grateful if you can resolve my query regarding the following issue in Service Tax.

As per Rule 6 of Service tax Rule, 1994 (Payment of Service tax), “in case of individuals and partnership firms whose aggregate value of taxable services provided from one or more premises is fifty lakh rupees or less in the previous financial year, the service provider shall have the option to pay tax on taxable services [provided or agreed to be provided] by him up to a total of rupees fifty lakhs in the current financial year, by the dates specified in this sub-rule with respect to the month or quarter, as the case may be, in which payment is received.”

My doubt is regarding how to calculate the value of taxable services provided during a year. For eg:- let’s assume that a CA firm is maintaining books as per Cash basis. In the Previous year the total receipts for audit services rendered is, say, Rs 40L . In the current year the total receipts is, say Rs 46L. Now out of this 46L , an amount of Rs 10L pertains to Previous year and also RS 15L is yet to be received for audit services rendered. Now My total Taxable service for the Current year is Rs 46L or RS 51L?? (46-10+15=51). Also my Value of taxable service for last year is Rs 40L or RS 50L?? (40+10=50).

Thanks all in Advance

Pradeep Nainawati

Pradeep Nainawati (Expert)
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08 July 2013 Hi Sundar,

There is difference between the "Payment of Tax" and "Taxable Service provided or agreed to be provided"

Point of Taxation Rules, 2011 will determine when is point of taxation i.e. when the service is deemed to have been provided.By these rule the limit of 50 lakhs will be determined. Whether the assesse is maintaining books at cash basis or accrual basis it does not matter.

In current example last year value of taxable service is Rs 50 Lakh and current year taxable service is Rs 51 Lakh

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Sai Sundar

Sai Sundar (Querist)
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09 July 2013 Thank u v much sir for your quick response...

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