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Service Tax Payment procedure

anuj dhingra (Accounts Executive) (152 Points)

17 August 2010

if we recd payment against any bill raised by us. it our liablity to pay service tax. but if we recd payment without service tax . it means party has not paid service tax to us , so i want to know its our liablity to pay service tax by backward calculation or other . please tell me any rule. urgent

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9 Replies

(Guest)

if you are liable to charge service tax from party but inadvertently you not charge in your bill and party give you payment without service tax, still it is ur duty to pay service tax to govt. by presuming that amount is inclusive of service tax.

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Dipsang Vadhel (A.O.) (24 Points)
Replied 17 August 2010

When the amount is collected against provision of Taxable service,total amount recd should be treated as inclusive of taxdue to be paid by the consumer of service unless service tax is also paid by the customer seperately. So In case where customer do not pay service tax, you can traet amount received as inclusive of tax and adopt backward working. Refer sub section (2) of section67.

anuj dhingra (Accounts Executive) (152 Points)
Replied 17 August 2010

my question is

bill amount = 100

+service tax = 20

Total = 120, so party has paid only 100 rs not 120

i want to know whether its our liablity to pay service tax of rs 20 or not . i want any circular or notice

Dipsang Vadhel (A.O.) (24 Points)
Replied 17 August 2010

Ok . consider this illustration.

You have charged Rs.100 for your service. In your Bill, you will charge service tax @ 10.30%, say rs.10.30.

Now since your client has paid you Rs.100 and not paid service tax. Consideration received Rs.100 is considered to be inclusive of service tax.

Therefore, you will be required to pay service tax using following formula:

Service Tax payable= (amount recd*Rate of S.T)/ (100+rate of ST)

You will be liable to pay Rs.9.33.

This has been provided in Section 67(2) (in valuation rules )itself.

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CA Abhiram Bharat. (Assistant Manager Taxation) (508 Points)
Replied 18 August 2010

yes of course, it is the duty of the provider of output services, to pay, to the credit f central government ,the amount service tax chargeable on the invoice amount, whether or not such sum has been recieved by the said provider.

regards-

abhiram

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SekharPadala (Dy. Manager Accounts & Finance) (36 Points)
Replied 18 August 2010

Dear All,

Thanx for your suggisitions!!

i have allso one more doubt related to this servise tax !!!

if i collect some advance including ST agst service providing. In that case what is the treatment of tax ST payable account.

ill Example : Insitial advance collected inclusing ST 168 Cr (10.3% ST included inthis amount)

please advises me above the case.

hope your positive response

1 Like

mohit patwa (article) (36 Points)
Replied 19 August 2010

servvice tax liability is arised when u received amount against bill or in advance. if you received amount in advance then service tax payable account is credited and when u paid the liablity it wil be debited.