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service tax on commercial coaching centre

30 April 2011

PLS TELL ME THAT IF A CO. IS RUNNING ITS BUSINESS AS A COMMERCIAL COACHING CENTRE AND THE STUDENT PAYS FEES IN INSTALMENTS.SO CAN ANYONE TELL ME THAT SERVICE TAX HAS TO BE DEDUCTED ON CASH BASIS(WHEN STUDENT PAYS THE FEES) OR ACCRUAL BASIS (WHEN THE FEES IS DUE).PLS HELP ME ITS URGENTTTTTTT.

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4 Replies

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 02 May 2011

With the introduction of Point of Taxation Rules effective from 01-04-2011, service tax is payable on accrual basis. ie. date of bill or receipt of money whichever is earlier.

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Kaival Mehta (CA student) (120 Points)
Replied 03 May 2011

Originally posted by : Shubham Singhal
	PLS TELL ME THAT IF A CO. IS RUNNING ITS BUSINESS AS A COMMERCIAL COACHING CENTRE AND THE STUDENT PAYS FEES IN INSTALMENTS.SO CAN ANYONE TELL ME THAT SERVICE TAX HAS TO BE DEDUCTED ON CASH BASIS(WHEN STUDENT PAYS THE FEES) OR ACCRUAL BASIS (WHEN THE FEES IS DUE).PLS HELP ME ITS URGENTTTTTTT.

Dear sir, educational institue did not issue any kind of bill to their student, they just provide payment receipt on receiving payment from student.

So in my opinion, the point of taxation will be the receipt of the fees.

however the department can claim it that, point of taxation is applicable on the whole amount of fees on the first day of admission of student.

so we need much more clarification on the same.

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 03 May 2011

As per Rule 4A of ST Rules , Bill shall be issued within 14 days from completion of service or receipt of payment whichever is earlier. Department cannot hold that entire fee is liable to tax on adimssion itself.

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 10 May 2011

The Notification 33/2011 creates a doubt whether the commercial coaching for education - say for Bcom, BSC, CA/ICWA etc would be liable for servic etax in future. The clarity for the same would reduce the cost to the students if clarified.

As far as POTR is concerned: the fees as per the installments agreed - set out wouldbe the date on which the service would be deemed to be provided in the absence of bills being raised as rightly observed.