Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Service tax credit

srinivas (service) (71 Points)

01 May 2009

If accounts dept. pay to the service provider booking the full bill and service tax and then deducting fine & penalty 50% then on what amount the service tax credit we will claim.

srinivas

Reply
Follow
Share

4 Replies

(Guest)

you have not stated the type of panelty or fine. You have to charge input for balance amount (Original Bill amount - Penalty/ fine)

Upgrade to CAclubindia Pro. Subscribe Now!

atul gupta (proprieter) (97 Points)
Replied 01 May 2009

what I understood:

Your Company received a Bill for Rs. 1,000/-, it is booked, thereafter due to some reason penalty/fine was imposed on service provider and net payment restricted to Rs. 500/-.

I try to answer:

in first instance it appears because vaule of service is Rs.1,000/- so service provider is liable to pay service tax on Rs.1,000/- so he will charge service tax on Rs.1,000/-.

But if fine/penalty is of such nature which reduces the value of service itself then Service Tax is payable only on Rs.500/-.

In any case, your eligibility to take credit is not determined by the fact for which amount Bill has been raised but by the fact what amount for service and service tax you had paid.

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 02 May 2009

The Service provider as well as the receiver of service would pay on/ be eligible for 50% of the bill amount.

srinivas (service) (71 Points)
Replied 02 May 2009

As he is a labour contractor Original Bill Value is Rs.12360 .00 in which service tax amount is Rs.1360 which is inclusive in the Value of Rs.12360.00 , now we are booking the bill in next month of service received on dt. 09.04.09 , as he is not provided the service well so he had fined for the same with Rs.5000.00 , now can we rectifiy the bills by reducing the bill amount with that fine amount or we will book the bill with full expenses and then the deductions.

What i had did is that we had booked the bills with full value and then by passing jv the dedcution done.

When the document i had send to the excise dept. for service tax credit then he told me that what amount you had paid to the service provider on that amount only we can get the service tax credit.

Please provide your valuable advice.

Regards,

Srinivas