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Service Tax Payment on the Transactino between the Inter-Co

MAHENDRA LAD (Service) (112 Points)

03 November 2009

When the Service Tax is payable ,the transaction is done between the Inter Group Company?

It's on receipt basis or on the accrual basis.

As per Service Tax Act, Tax is payable on Receipt Basis. But I want to know about the above transaction.

Pls help me.

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5 Replies

Sunil (Trader) (2611 Points)
Replied 03 November 2009

Service Tax is applicable between inter group companies.

Service Tax is not applicable only when the transaction is between branches of the same company. However, it is specified in Service Tax that for service recepient paying against import of services, foreign branch of Indian company, firm or individual will be treated as separate entities.

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Sameer (.) (252 Points)
Replied 04 November 2009

Mahendra,

As per explanation to 67of the Finance Act, 1994 service tax in case of inter-company (associated enterprise) will be payable on accrual basis.

Please refer Circular No. 334/1/2008-TRU dated 29.2.2008

Regards

Sameer

MAHENDRA LAD (Service) (112 Points)
Replied 04 November 2009

Originally posted by :Sameer
"	Mahendra, As per explanation to 67of the Finance Act, 1994 service tax in case of inter-company (associated enterprise) will be payable on accrual basis. Please refer Circular No. 334/1/2008-TRU dated 29.2.2008 Regards Sameer	"

Dear Sameer,

If suppose in the inter group co. transaction the company raise the Proforma Invoice for the advance purpose and the company received the advance so at that time he has to pay the tax or not or on raising of final invoice after giving the service.

Sameer (.) (252 Points)
Replied 04 November 2009

Mahendra,

After 13.05.2005 service tax will be payable as soon as advance is received, even if service is provided later - view confirmed in MF (DR) circular No. B1/6/2005- TRU dated 27.07.2005.

Please note upto 13.05.2005, the provision was that service tax was payable only when service is actually provided.

Service Invoice under rule 4A, is required to be raised, even when advance is received, Cenvat Credit of service tax will only be available on the strenght of this invoice only.

Regards

Sameer