When should service tax be paid as per new rules

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Querist : Anonymous

Querist : Anonymous (Querist)

16 March 2013 I am a proprietor for a firm which is into video tape production category of service tax. My revenue / income stands below Rs.50.00 lacs for current and preceeding financial year. I want to clarify whether i have option of paying service tax on receipt basis as per the new rules / notifications of service tax. Is this option available for select 08 individual / proprietorship service providers such as CA, CS, Architect, Lawyers etc. or individuals like me (service provider of video tape production) also have this option of paying service tax on receipt basis.

Sumit Grover

Sumit Grover (Expert)
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16 March 2013 it is applicable for all individuals & partnership firms.
Source: Provisio to Rule 6(1) of Service tax rules, 1994 ( amended by Notification No. 03/2012 dated 17-Mar-2012)

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Querist : Anonymous

Querist : Anonymous (Querist)

16 March 2013 Mr Grover, Hope there is no further amendment to the said notification. What does the notification no. 04/201-service tax dated 17.03.2012 and corrigendum to notification no. 03/2012-service tax dt 17.03.2012 related to. Please check thoroughly, since i have to work out my service tax liability on the invoices raised but for whom no payment has been received till date. Am i supposed to deposit service tax on invoices raised (being a proprietor of video tape production service provider). Pls confirm and reply

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Sumit Grover

Sumit Grover (Expert)
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16 March 2013 Dear Querist, there are two provisions which you need to understand.
1) Prior to April 1,2012, there were eight specified individual/partnership firms being the service providers(e.g. CA,CS,interior decorators,etc.) who were given the option to pay service tax on receipt basis. Now, by virue of N/N 04/2012, even they are liable to pay as per POT provisions(i.e. earlier of invoice & payment)on or after April 1,2012

2)However, N/N 3/2012 has given exemption to all the individuals & partnership firms from paying the ST on due basis upto Rs. 50 Lakhs. Meaning thereby, those assessees ( individual/partnership firms) whose preceding FY's turnover doesnt exceed Rs. 50 Lakhs, they have the option to pay on receipt basis upto Rs. 50 Lakhs & beyond Rs. 50 lakhs, Normal POT Provisions shall apply.

In your case, you have the option to pay on receipt basis since the information given by you in the query states that the current as well as the previous FY's turnover doesnt exceed Rs. 50 Lakhs.

Querist : Anonymous

Querist : Anonymous (Querist)

16 March 2013 Mr Grover, again many thanks for your kind reply, but still i am bit confused:

1. Notification no. 04 must have come out after notification no. 03, So will the provisions of notification no. 04 supersede provision of notification no. 03.

2. in a nut shell, in my case when i do not have a turnover of Rs.50 lacs or more in current or preceeding year, i as individual proprietor of video tape production service can avail option of paying service tax liability on receipt basis.

3. Why i a again n again asking the same thing is that i have few invoices raised for which payment have not been received for last 10-11 months. So does my liability to pay service tax arise on these invoices or not?

Please reply...thanks in kind anticipation.

Sumit Grover

Sumit Grover (Expert)
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16 March 2013 Dear Querist, both the notifications are dated 17-Mar-12.....none of them is rescinding the other one......Moreover, both the notifications have been issued under different rules, one under POT & other under SERVICE TAX RULES, 1994

You still have the option to pay on receipt basis(provided your turnover criteria is satisfied)