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Service tax on extra amount received

Ritesh khurana (CA student) (175 Points)

12 December 2011

Dear all

if service provider receive extra amount from service receiver in addition to invoice amount, Do service tax is payable on additional amount ? can service provider claim this additional amount is not for service and directly treat it as income ,

thanks and regards

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7 Replies

CA Prabhat Gupta (Manager (Indirect Taxes)) (821 Points)
Replied 12 December 2011

No, any amount received in relation to a service provided, whether at the time of providing service or at any later time, will be considered as part of assessable value & tax will have to be paid accordingly.

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CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 12 December 2011

Extra amount is liable to service tax if the same has nexus with the service provided.

CA Chirag Haraniya (Chartered Accountant) (902 Points)
Replied 12 December 2011

Originally posted by : CA Prabhat Gupta
	No, any amount received in relation to a service provided, whether at the time of providing service or at any later time, will be considered as part of assessable value & tax will have to be paid accordingly.

Agree with both...

RENGARAJ R.K (ADVOCATE) (7557 Points)
Replied 21 December 2011

As per the provisions, gross amount charged ffrom service recipeient is the taxable whether it is single bill or thro extra amount by way of debit note. The extra amount is in relation to the orginal taxable service invoice.

rengaraj r.k

Ritesh khurana (CA student) (175 Points)
Replied 21 December 2011

Thanks for all replies.

One more qurey related to this

if service provider deposited service tax on advance to govt later on service is not provided or agreement of service is cancelled and entire advance amount returend to client

Question is do service provider is allowed to take credit of service tax already deposited to govt. if yes there is any time limit for use that amount of credit.

Thanks in advance

Ritesh

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CA Prabhat Gupta (Manager (Indirect Taxes)) (821 Points)
Replied 22 December 2011

Yes Ritesh,

Please refer to Rule 6(3) of Service Tax Rules, 1994 as amended.

It says that," (3) Where an assessee has paid to the credit of Central Government service tax in respect of a taxable service, which is not so provided by him either wholly or partially for any reason, the assessee may adjust the excess service tax so paid by him (calculated on a pro rata basis) against his service tax liability for the subsequent period, if the assessee has refunded the value of taxable service and the service tax thereon to the person from whom it was received."

Hence, as per above provisions of Service Tax Rules, 1994 you can utilise the service tax so deposited against the service tax liability for the subsequent period.