Adjustment of Service Tax On Advance Receipt

[Raj Thakur]

Hi,

I am Raj Thakur, I want to know that if we are paying service tax on advance receipt and later on we are also paying service tax on invoices i.e. when the services actually rendered. Then how we can adjust the service tax amount paid on advance receipt and what accounting entry would be passed in the books of account.

Kindly Suggest.

[Brijesh Verma]

Any amount can be taxed once and only once. According to Point of Taxation Rules POT arises on invoicing, payment or completion which ever is earlier.

SO you need not pay tax again and there will not be a question of adjustment then.

[MANDAVILLI RAMAKRISHNA]

dr the customer by service tax amount on adv. payments cr the service tax collected account pay the taxes and  debit the ST collected account.

accounting entries to be conceptualized and can not be suggested easily in the forum.

AI Summary

Clarification on Service Tax: Pay Once per Point of Taxation Rules; Accounting Entries Require Detailed Consideration. A participant in a discussion forum inquired about adjusting service tax paid on advance receipts when service tax is also paid upon invoicing. One response clarified that service tax should be paid only once, as per the Point of Taxation Rules, which dictate taxation on invoicing, payment, or completion, whichever occurs first. Another response suggested debiting the customer by the service tax amount on advance payments and crediting the service tax collected account, advising that specific accounting entries need careful consideration and cannot be easily provided in the forum.