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Corporate Tax Advisory

 

is the service tax on invoice instead of receipt is a good move?

Created by : shashi b prasad, Accounts & Finance Manager, I & S Communique P Ltd.  | 08 18 2010 18:48:19 +0000
Keywords : service tax on invoicing
Activity:  425 views;  last activity : 04 18 2011 17:28:58 +0000
 
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What difference does it make? Service tax on invoice is like payment of advance taxes. What if the money is not collected? Then you can claim it as a rebate and also claim bad debts. The Government wants to realise the service tax early and so this move. I dont see any other downside other than this
By Raju V P, Senior Manager, an International Bank  | 04 18 2011 17:28:58 +0000
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I think its a good move, any way service tax is on the service provided hence it should be on the billing basis as bill is raised when the service is complete. I agree that liquidity of the company will affect but right  now state tax is also payable on billing basis so over a period it will take care of itself.
By lalit shriram raut, Freelancer, Freelancer  | 04 07 2011 17:32:45 +0000
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I agree with Saseendran that we never receive the invoice value.But it is not possible in large corporates to track the receipts. So it is better to give the tax now.
By sanjay dey, Tax & accounting , Consultatnt  | 02 06 2011 17:50:40 +0000
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Yes it should be charged in invoice only rather than receipt because if it will be on actual receipt there is a chances for escaping from the tax.
By R. RAM TELANG, Dy. Manager (F&A), SEW Infrastructure Limited  | 08 22 2010 11:40:44 +0000
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Shashi I agree with you.....there shouldn't be any change in the tax system. This will incur more cost to the company....    
By Latha Baskar, Accounts Manager, L & T Infotech  | 08 20 2010 11:08:37 +0000
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I am sure the new law will give great business to law community because there will be situations in which a service tax payer (read service giver) shall find it very painful to pay tax when he does not get the amount from party to which he has given service. Consider this , he does not pay the service tax as the invoiced amount itself remains due from party,so he shall be liable to all kinds of penalty under service tax law. Now consider Income tax Law. Section 43B will now be attracted (previously Courts had give favorable judgment that since liability to pay service tax arises only on getting the service tax amount from customer, the tax payer may not account for the amount as along as he does not receive it). So , the amount of service tax whether received or not, shall have to be recognized as income and expense under P & L account and such service tax shall be disallowed u/s 43B on the argument that it has not been paid , so can not be allowed. I am sure , the amendment will add to woes of common service providers .
By taxworry , Confidential  | 04 18 2011 16:14:35 +0000
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Billed amount is not always received, because may deduct certain amount at times.  Therefore service tax should be on receipt basis.
By Saseendran M.K., Labbour law and tax law practitioner, Advocate  | 08 20 2010 12:14:05 +0000
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payment of service tax should be continue to be on receipt basis and service tax credit on payment basis as if changed to payment on invoice basis then technically service tax credit will also be on the receipt of invoice basis and it will lead to more tax avoidance / evasion.
By shashi b prasad, Accounts & Finance Manager, I & S Communique P Ltd.  | 08 18 2010 18:48:19 +0000
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