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Calculation of service tax liability

shruti (CA) (80 Points)

17 April 2009

Suppose a person starts providing a taxable service from Feb 09 and had a service tax liability of Rs 25000 in Feb and Rs 18000 in March (calculated retrospectively). An input service contract was entered in Feb 09 but based on the credit terms the payment was made in March The Cenvat credit on that was Rs. 32000. Due to lack of awareness the providers gets to know about the applicability of ST laws in April and applies immediately for ST no. Accordingly the tax has now to be paid and returns filed before due date.

My query is what is the amount of ST he has to pay now in April (11000=25000+18000-32000) or pay 25000 complete for feb and carry forward a cenvat of Rs 14000 (32000-18000)

similarly how would the interest (13%pa) and penalty (200 per day or 2% pm) be calculated

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11 Replies

(Guest)

Since he has started providing taxable service from feb 09......then from your question it is clear that the person is a small service provider for the year 08-09.

Now for registration :-Registration becomes compulsory when taxable service has been provided for 9 or more than 9 lacs.if taxable service has been reached to 9 lacs then within 1 month he must apply for ST registration.Since from your question it is also clear that the person has provided less 9 lacs of service.

How ever if has collected ST seprately in the bill from his client then he has to pay the service tax to the credit of Central gaverment by instant registration.

since he is individual he has to pay quarterly payment that and for that due date is 31st march.

Now he required to pay quarterly payment there fore he can adjust his cenvat credit from the entire amount. i.e he will pay only Rs 11000 +13% on 110000 for the delay from 1st april to the date of payment

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(Guest)

Hope it is clear........if not plz inform

Varun Pandya (Practice) (69 Points)
Replied 18 April 2009

Originally posted by :shruti
"	Suppose a person starts providing a taxable service from Feb 09 and had a service tax liability of Rs 25000 in Feb and Rs 18000 in March (calculated retrospectively). An input service contract was entered in Feb 09 but based on the credit terms the payment was made in March The Cenvat credit on that was Rs. 32000. Due to lack of awareness the providers gets to know about the applicability of ST laws in April and applies immediately for ST no. Accordingly the tax has now to be paid and returns filed before due date. My query is what is the amount of ST he has to pay now in April (11000=25000+18000-32000) or pay 25000 complete for feb and carry forward a cenvat of Rs 14000 (32000-18000) similarly how would the interest (13%pa) and penalty (200 per day or 2% pm) be calculated	"

Agree with Raza`s view.

Just would add that you need not pay any penalty though its prescribed by statute

shruti (CA) (80 Points)
Replied 18 April 2009

Thanks for the input but the situation is that the service provider is a registered society, (required to pay ST monthly) and secondly in monetary terms not a small provider, since the collection in the month of Feb itself exceeded Rs. 9 lakhs. In that case what would be scenario. (The figures quoted in the initial query are just for illustration purposes, the actual figures are in lakhs)

And also can he claim the exemption of initial Rs. 10 lakhs as applicable in first year of service and pay ST on the balance payments received.

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 20 April 2009

The ST payable for feb wouldbe 25k+ interest. And for march 14k credit could be carried forward. No penalty

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Varun Pandya (Practice) (69 Points)
Replied 22 April 2009

Originally posted by :shruti
"	Thanks for the input but the situation is that the service provider is a registered society, (required to pay ST monthly) and secondly in monetary terms not a small provider, since the collection in the month of Feb itself exceeded Rs. 9 lakhs. In that case what would be scenario. (The figures quoted in the initial query are just for illustration purposes, the actual figures are in lakhs) And also can he claim the exemption of initial Rs. 10 lakhs as applicable in first year of service and pay ST on the balance payments received.	"

Shruti,

(1.) You can avail the basic exemption of Rs.10 lacs as your crossing that mark for the first time.

(2) For feb u need to tax on amount above 10 lacs and add interest to it

(3) For march u need not pay anything and carry forward the excess credit

Hope that would help

shruti (CA) (80 Points)
Replied 22 April 2009

Thanks Madhukar and Varun

It clear now.

Devraj Pednekar (Architectural Company) (22 Points)
Replied 24 April 2009

Hi I am Devraj Pednekar working in Architectural Company, I want to ask you a question, I have filed ST 3 Return for the last year 2007-2008, but not shown the inpur services for centvat credit for one of service provider in the March 2008 now Can I take this credit of centvat in the month of April, 2008. as one year has been passed now what will be my liability on this matter, please guid us.

Thanx

Pritesh Vijayprakash Goyanka (PVG) (21 Points)
Replied 15 December 2010

What will be service tax liability if a amount are deducted from bill of the assessee at the time of making payment as retention money and security deposit and refunded later after 2-3 years?

When will be the amount of retention money and security deposit be taxable? At the time of such deduction or at the time of actual receipt of payment after 2-3 years?

Please guide....

Thanks..

Deepak Rawat (admin) (24 Points)
Replied 11 February 2011

Please tell me the method of prepration of service tax return

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Ayush Agarwal (Article) (35 Points)
Replied 11 October 2012

URGENT!!!!!!!!!! I have a firm which has to pay the service tax of july-sep the due date of which was 5th oct . however i have cancelled some bills of last financial year in september and there are some bills which Are cancelled in march . can i take the credit of service tax on these bills against the amount payable of Q2??