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Mobilisation Advance and Service Tax

Ajay s (Accounts Officer) (243 Points)

17 March 2011

Dear All

We have received an Order and the client is ready to give Mobilisation Advance.

My question is whether mobilisation Advance is liable to service Tax ?

and pls explain difference between Advance and Mobilisation Advance

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5 Replies

Pankaj Arora (Learner) (3134 Points)
Replied 17 March 2011

https://www.clients.cmlinks.com/budget/story.asp?SNo=377555

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manjari (Article ) (56 Points)
Replied 18 March 2011

thanx for the link Mr. Pankaj..., but it vl be really helpful if u can clarify that further.

Actually, I am clear with that sevice tax is levied on mobilisation adv. but is it payable at the time of payment of mobilisation adv. or while making the final payment???

It vl be a great help if you can respond this query as soon as possible.

Joey Tribbiani (fdg) (2010 Points)
Replied 18 March 2011

Explanation 3 to sec 67 states that amount charged for the taxable service shall include any amount received towards the taxable service received before, during or after provision of such service. Hence if the service is taxable,service will also be collected and paid on mobilisation advance.

As for mobilisation advance,it is the advance given for construction work. It is just a nomenclature of giving advances. As per my experience the only difference between "Advance" and "Mobilisation Advance" is the way they are recovered. The companies which I audited used to deduct the % of advance given of the total contract amount,from the RA bills of the contractors as and when they are raised. However the advance had the nature like 100% of bill is paid in advance.

Pawan Varshney (Accounts Manager) (22 Points)
Replied 11 July 2012

HI, I AM ACCOUNT MANAGER IN PRIVATE LIMITED COMPANY, DEAL IN INBOND TOUR OPERATOR, I AM NOT CLEAR AT RENTAL OF COACH & CAB, PLS CLEAR THE SERVICE TAX ON RENTAL TRANSPORT ??????

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 12 July 2012

If the transporter avails any CENVAT credit, then he has to charge service tax on 100% of the value of the invoice, provided that the transporter is a company registered under the Companies Act, 1956. Else the service tax liability of the service provider will be @ 12.36 on 60% of the value of the bill and service receiver will be liable to pay service tax on 40% of the bill value @ 12.36% under reverse charge. But, If the service provider is not availing any CENVAT credit, then there will be no service tax liability of the Contractor and the service receiver is liable to pay tax @ 12.36% on 40% of the bill value under reverse charge.