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Service tax

Sumanta Das Gupta (Accountant) (310 Points)

29 May 2012

Dear Friends,

While working for my client, I have come across this problem. The service tax rate for the F.Y. 2012-13 is 12.36%. The client is a construction company. It has raised bills to it's debtors on 31st. March, 2012, but received payments subsequently inclusive of Service Tax @ 10.3%. The questions are :

Does the client company have to pay service tax @ 12.36% if it receives payment on , say, 20.05.2012 ?

How does it show the overpayment of Service Tax ( 12.36% - 10.3% ) in it's books of acoounts ?

Please reply.

Thanks & regards.

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1 Replies

Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 29 May 2012

HI Sumanta,

First and foremost, service tax rate w.e.f. 01.04.2012 is 12.36%. hence any bills raised therebefore shall apply rate of 10.3%. Please note point of taxation changed w.e.f. 01.04.2011 is the date of invoice raised or the date of receipt of payment whichever is earlier. The only exception to service tax payable by person as receipient of service under reverse charge machanism under which service tax liability arise when payment to vendor made. Hence, for service provided other than under the reverse charge machanism, point of taxation is the date of invoice raised or date of receipt of payment whichever is earlier. Since, in given case, you raised bill on 31.03.2012 when applicable ST rate is 10.3% and not 12.36%, ST liable to pay only for 10.30% and not 12.36%.

Regards,

Manoj B. Gavali