Applicability of service tax

[Guest]

Dear Sir, As per rule of Service tax, service tax is payable to Govt is on Payment received basis.Suppose our practice is to bill to any party is on quarterly basis and at the time billing the service is non taxable as per service tax law. after one month of billing ( suppose bill raised on 01.04.07 , up to 30.06.07 but service tax is applicable wef on 15.05.07 ) service tax become applicable on it. What would be the service tax treatment ? 1. When till today payment of bill not recd. 2. When payment of bill recd. same day i.e. 01.04.07 for full quater w/o service tax as service tax not levied on it. Thanks Manoj

AI Summary

Service Tax Applies Proportionately from Taxable Date, Regardless of Billing or Payment Timing. Liability Tied to Service Date. A discussion on the applicability of service tax when billing occurs quarterly, and the service becomes taxable after billing. The initial query seeks guidance on service tax treatment when payment is received before or after the tax becomes applicable. Respondents advise that service tax should be applied proportionately from the date it becomes applicable, regardless of billing date. They emphasize that liability is based on the date of service provision and receipt of payment. Any subsequent tax rate changes or new levies do not affect already reported receipts. The consensus is that service tax is payable from when the service becomes taxable.