Service tax

This query is : Open

ejaz naiyer (Querist)
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12 July 2012 I want to know whether Proprietor Business has to pay service tax on the basis of point of taxation rule or on the receipt basis. My one friend told me that individual is exempt from the new rule. And hence liable to pay tax ( Financial Year 2011-12) on receipt basis only not on invoicing basis.

Is it correct? please help me.

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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13 July 2012 Mr Ejaz naiyer,
As soon you receive payments ST liability arises. If you do not receive advances as soon as you issue an invoice and that too within 14 days of completing the service(see rule3).....MJK

Arun Gulati

Arun Gulati (Expert)
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14 July 2012 with due regards, I dont agree with Mr. MJK view..as per proviso to Rule 6 service tax rules, 1994 provides that 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 by him up to a total of rupees fifty lakhs in the current financial year when the payment is received. Therefore, if your taxable turnover is less then 50 lakhs pay on payment basis.

And one more things, provision to raise invoice has been increased from 14 days to 30 days.

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