Service Tax Advance Payment

[Siraj Shaikh]

Dear Sir,

A advance payment has to be made against the Service to be received towards Maintenance Contract. The Party is asking even for the Payment of Service Tax along with the Advance..... Can such advance be made and the credit be taken ?

 

[YAGAY and SUN]

Yes, Service tax is payable on the advance payment and also is allowed to be taken as credit of such amount.

[MANDAVILLI RAMAKRISHNA]

yes. but be sure, the service provider is competent and sincere to complete the work.

further tell him, out of the 100 rupees paid by you as advance it consits of ST also and ask him to pay

that in his account and after completing total work and after receiving invoice form him, release

the balance payment.

the above suggestion is useful when you are making payment advance of rs. 500000 or more only.

for small amounts, do not make puzzles.

[Harishanker Patel]

Dear experts, Please provide any refrence of notification/circular/rule for taking credit on service tax paid in advance, prior to receiving the service.

[MANDAVILLI RAMAKRISHNA]

mr. harisankar,

 

why u want notification or rule, you are eligible to take the service tax charged by your service provider on advance payment.s always.

[Harishanker Patel]

Dear Ramakrishna Sir,

I want to know the provisions  for taking credit on service tax paid in advance  before receiving the service in actual.

AI Summary

Service tax on advance payments: tax arises on receipt and input credit is available when properly invoiced and accounted.
Service tax is payable on advance payments for taxable services and the service recipient is entitled to take input tax credit on the service tax charged on that advance, subject to normal credit conditions; compliance requires an invoice evidencing the tax and assurance that the service provider accounts for the tax.