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Service tax entry on provision booked

Pushpak Lal (Student CA Final ) (286 Points)

07 June 2016

Suppose, i am a service recipient and i pay service tax on reverse charge basis on security expense. On 31st March, i have made a provision entry for march month security expense entry. I have received the bill on 13th April and reversed the provision and recorded this bill. When do i have to book the service tax entry ? And when do i have to make the payment on it?

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4 Replies

Chirag Parmar (Service) (65 Points)
Replied 07 June 2016

in the instant case Rule 7 of the Point of taxation Rules, 2012 would be applicable.

As per Rule 7 of the said rules, Point of Taxation in the case where person liable to pay service tax under sub section (2) of section 68 is Date of Payment. However, if the payment is not made within 3 months of the date of invoice then point of taxation shall be the date immediately following the said period of 3 months.

You have received security services, so rule 3 i.e. general rule will not apply as it is specifically covered under rule 7 of the said rules. Further, rule 7 doesn't take in to consideration aspects related to provision of service as well as provision made in books of account related to such expense or debit in the books of account except in the case of associated enterprise.

So your query is addressed as under-

1. You may book entry on 13.04.2016 i.e. date of invoice. However, it is not relevant if you make provision for the expense on year end before the receipt of invoice.

2. Liability of service tax would be 6th of the next month of the date of payment. However, if payment is not made within 3 months of the date of payment then 6th of the next month of the date immediately following the said period of 3 months.