PAYMENT OF SERVICE TAX AFTER ISSUANCE OF INVOICE IF AMOUNT TO THE EXTENT OF RS.1000/- EXCESS RECEIVED
7.1 Background: In some industries, specifically Telecommunication companies, generally receives some small amounts in excess of billed amount. In such case, rule 4A of Service tax Rules, 1994 required them to issue an invoice in respect of such excess amount and rule 3 of Point of Taxation Rules, 2011 required them to make payment of such excess amount on receipt basis.
Therefore, it was an accounting problem to pay the service tax on such excess amount on receipt basis and issue invoice thereof.
7.2 Amendment: Now, proviso has been inserted to rule 4A of Service Tax Rules, 2012 to provide that assessee is not required to issue an invoice if an amount, not exceeding Rs.1,000/- in excess of the amount indicated on invoice, is received.
Further proviso has also been inserted to rule 3 of Point of Taxation Rules, 2011 to provide that point of taxation in respect of such excess amount received shall be the date on which invoice in respect of this amount is issued. However, if invoice is not issued within 30 days from the date of completion of provision of service, then, in such case, date of completion of provision of service (against such excess amount) shall be the point of taxation.
Thus, in respect of an amount received, not exceeding Rs.1,000/- in excess of the amount indicated on invoice, service tax is not required to be paid at the time of receipt of such payment.
7.3 Illustration: Telecommunication Company ‘ABC’ issued an invoice for Rs.7,537/- on ‘B’ on 07.05.2012 for the month of April’12. Thereafter, ABC receives payment amounting to Rs. 8000/- from B on 20.05.2011, i.e. Rs.463/- received in excess of amount indicated on invoice.
ABC is required to pay service tax in respect of invoice issued for 7537/- while discharging the liability for the month of May’12. (ABC is not required to pay service tax receipt of excess amount).
On 07.06.2012, ABC issues an invoice for Rs.8787/- on B for the month of May’12. Now, on 21.06.2012, B makes payment of 8,324/- after adjustment of Rs.463 already paid in excess. ABC shall pay service tax in respect of Rs.8787 while discharging service tax liability for the month of June’12 on invoice basis.
By CA. Vikas Khandelwal,Website: www.vkcca.com ,Ph: 011- 27356481,