Advance Payment made to Vender without payment of service tax with Advance

[vikram singh]

Dear experts,

kindly guide,

We paid 10% (on Assessable Value) advance to a party. but, the party asking for 10% on Gross value (including service tax) and say that they have require to pay service tax to Govt.

here my query is that, Is service tax liability is occur toward service provider, if we pay advance 10% on Assessable value or not ?

please revert, and if possible please share notification in this regard.

Regard

Vikram

AI Summary

Advance Payments Must Include Service Tax as per Point of Taxation Rules and Finance Act Definitions. A discussion on a forum addresses a query about the service tax liability when an advance payment is made to a vendor. The initial question concerns whether service tax should be calculated on the assessable value or the gross value, which includes service tax. Experts in the forum clarify that, according to the Point of Taxation Rules, service tax is payable on any advance received. Further explanations reference the definition of 'Gross Amount Charged' under the Finance Act, emphasizing that it includes any payment received for taxable services. The responses collectively affirm the necessity of including service tax in the advance payment.