St payment

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 April 2016 Hi Experts,
We are partnership firm and paying ST on receipt basis, we have issued the invoice on 4/4/2016 but this service was related to march and the payment of this invoice was received on 11/4/2016, please let me know what will be the due date for ST payment of this invoice,
Note... we are paying ST on receipt basis

Regard
Mohit Gupta

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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15 April 2016 With effect from 1st April 2011, per Point of Taxation Rules, service tax is payable on any one of the following occurrences happening:

(a) Date of Completion of Service Rendered.
(b) Date of Invoice issued within thirty (earlier fifteen) days of completion of service - else date of completion will be treated as date of service
(c) Receipt of consideration either as settlement or advance,

whichever is earlier.

Hence there is no scope for paying service tax on receipt basis. In case the services were completed after 5th March 2016, then the liability to pay service tax will arise in teh month of April 2016, but if the service was completed before 5th March, then the liability to pay service tax arises in the month of March 2016 itself.

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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Querist : Anonymous

Querist : Anonymous (Querist)

15 April 2016 Sir we are paying ST on receipt basis as our turnover is below 50 Lakh hence No question of pay ST on billing basis

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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17 April 2016 Your query was not clear, that you are professional firm with turnover below Rs.50 lakhs. In that case there is a provision for payment on receipt basis. Please note that this exception is applicable only to professional tax payers and not all service providers. Further, where this system is followed, in case there is a change in the rate of duty upward, the tax should be paid on enhanced rate.

Even for professional tax payers, the POT Rules apply and if the invoice is issued after 30 days the date of service is to be treated as service rendered on the date of completion. Since you pay service tax on cash basis, the reported turnover on mercantile basis is irrelevant. All that is required is proper reconciliation of your billing, bank receipts and ST - 3 Return, which has to be submitted, if called for by the Department.

With effect from 01-04-2016, even Senior Counsels rendering services to Solicitor / Lawyers & Firms are required to collect Service Tax and pay it upfront i.e. on billing basis and not receipt basis. This is just mentioned to clarify the stand taken by me.