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Service tax payment on december provision

shibsankar (Asst. Manager - Accountants) (119 Points)

24 December 2015

Hi Everyone I work for a MNC.. our company raise invoices towards operational and promotional costs on monthly basis to our associate enterprise which is located outside india And then they reimburse us in the subsequent month. As per our subsidiary group we need to close our books of account in December after making all the provisional entries. So My query is do i need to pay service tax on provision made in December. Because we reverse the provisional entry on 1st jan. We make this provision for MIS purpose only. Thanks

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Sonu Goenka (Professional) (62 Points)
Replied 24 December 2015

As per Rule 3 of point of taxation rules, 2011

point of taxation' shall be, the time when the invoice for the service issued Provided that where the invoice is not issued within the time period specified in rule 4A of the Service Tax Rules, 1994, the point of taxation shall be date of such completion of provision of the service.

Hence if you are going to raise the invoice within 14 Days of completion of service (in your case it would be 14.01.2016) then no need to pay service tax on provision.