Thursday, March 14, 2013


on Thursday, March 14, 2013

We have asked a tricky question about due date of service tax in case of Individual service provider on Simple Tax India Facebook page . Question was attempted by many person. Which shows that , people /professional are now love to discuss on service tax topics. Here we have given the complete question as asked on face Book , quiz result in % term ,relevant rule related to due date of  payment of service tax along with relevant notification and applicable date and quiz result.

The question is given as under.

What is due date to deposit service tax with following facts ?
  1. Services provided on 25.04.2012 
  2. Bill /invoice raised on 30.05.2012 
  3. Payment received on 01.10.2012 
  4. Service provider :Individual 
  5. Started services (business) on 01.04.2012 
  6. Expected turnover for Financial year 2012-13 :20 Lakh 
Option available in answer were

A:05.05.2012(06.05.2012 E payment)
B:05.06.2012(06.06.2012 E payment)
C:05.07.2012(06.07.2012 E payment)
D:05.11.2012(06.11.2012 E payment)
E:05.01.2013(06.01.2013 E payment)
What is correct answer according to you ? before reading below Just guess and then read the correct answer below.

Quiz results :As the question was tricky and we think persons have answered it in haste ,so we have received all the options in the answer ,From the reasons provided by the participant in support of their answer ,we can say that people have a knowledge about "Point of taxation rules "
  1. 30% person selected answer A ,with the reason that "as the bill was raised after 30 days ,so the point taxation shifted to date of provision of correct answer is 05.05.2012,
  2. 26% person selected Answer B , with simple logic that due date of payment of service tax is linked with date of invoice ,so correct answer is 05.06.2012.
  3. 28% persons selected Answer C, as they able to note down the point that service provider is an Individual and due date for payment of service tax for Individual /partnership is on quarterly basis , Further they think that point of taxation rule is applicable and as per PoT rules, point of taxation  is on the basis of invoice/Service provision date .
  4. 12% person selected answer D , with the reason that in case of Individual receipt date is to be taken i.e 01.10.2012 ,not the provision date or date of invoice,so due date is 05.11.2012 but they have ignored that service provider is an individual.
  5. 4 % Person selected the answer E with the logic that due date is  on the basis of date of  receipt  of payment and quarterly due date is  applicable in case of individual , so correct answer is 05.01.2013.
Relevant rules: Rule 6 Service Tax Rules, 1994

(1) The service tax shall be paid to the credit of the Central Government,-
(i) by the 6th day of the month, if the duty is deposited electronically through internet banking; and 
(ii) by the 5th day of the month, in any other case, immediately following the calendar month in which the service is deemed to be provided as per the rules framed in this regard:
Provided that where the assessee is an individual or proprietary firm or partnership firm, the service tax shall be paid to the credit of the Central Government by the 6th day of the month if the duty is deposited electronically through internet banking, or, in any other case, the 5th day of the month, as the case may be, immediately following the quarter in which the service is deemed to be provided as per the rules framed in this regard:
                   Provided further that the service tax on the service deemed to be provided in the month of March, or the quarter ending in March, as the case may be, shall be paid to the credit of the Central Government by the 31st day of March of the calendar year.
Provided also that in case of individuals and partnership firms whose aggregate value of taxable services provided from one or more premises is fifty lakh rupees or less in the previous financial year, the service provider shall have the option to pay tax on taxable services provided or agreed to be to be provided by him up to a total of rupees fifty lakh in the current financial year, by the dates specified in this sub-rule with respect to the month or quarter, as the case may be, in which payment is received.
So rule are very Simple and clear.
  1. Individual or proprietary firm or partnership firm are required to deposit service tax on quarterly basis ,on 5th day of the the month , Immediately following the quarter in which service is deemed to be provided as per rules framed (rules are provided under point of taxation rules)
  2. However third proviso provided an option to Individual or proprietary and partnership firms to deposit service tax on the basis of receipt of payment,if turnover of the such person is less than 50 lakh in previous financial year .
  3. Person can avail the benefit  of this proviso and may deposit   service tax on receipt basis on taxable service provided or agreed to be provided up to  50 lakh in current year.
  4. This rules is applicable from 01.04.2012 vide notification 3/2012 dated 17.03.2012 
  5. This Rule is applicable on all type of services provided by Individual or Prop. or partnership firm.
  6. From Financial year 2012-13 , benefit of payment of service tax on receipt of payment basis is not restricted to Service provider of 8 specified services, and now it can be availed by all type of service provider subject to conditions given above.
Correct answer:

For the above question , correct answer is E'' . Answer A,B,D can easily be ruled out as the service provider is an individual ,so payment due date can only be on quarterly basis i.e 5th of next month after the end of quarter , so we can restrict our answer to "C " and  Ë"" .

Further as the person has started business on 01.04.2012 ,so his last year turnover is less than 50 lakh (in present case -Nil)  and current year turnover is expected to be 20 lakh . So on the basis of option available under third proviso of rule 6 (1)(ii) of Service Tax rules,1994 (given above), due date to deposit service tax should be on the basis of Receipt of payment. In present case Date of receipt of Payment is on 01.10.2012 so falls under quarter 10/12 to 12/12 and correct answer is E i.e 05.01.2013(06.01.2013 For e payment)

Congratulations to CA Akhil Poddar  and Nilesh suchdevs has provided correct answer with necessary details.

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  1. Thanks a ton ! This has clarified the issue very well and put to rest various doubts on the interpretations of the rules introduced in 2012.

  2. Please guide in this. The Individual Main contractor collects only 25% (3.09%) of tax from service receiver (corporate) and pays 100% tax (12.36%) to the individual sub-contractor for the services received. The main contractor is not in position to pay such differential tax.

  3. What would be the position if the payment is not received till the end of the financial year ? In the case under discussion, if the payment is received only in April 2013, can the Service Tax be paid on or before 5th July 2013 or should it be paid before 31st March 2013 ?

    1. In above case service tax is not payable till the receipt of payment ,so if payment will be received in April 2013 ,then Due date also shifted to 05.07.2013.

      End of financial year, have no impact at all , on due date of service tax

  4. Dear Sir,
    I need a clarification for my client.
    As per the instruction of the service receiver the billing is made by the individual service provider on monthly basis i.e. service provided during a month is billed on 7th of next month & the turnover is more then 50 lakhs. Then what will be the due date of making payment every quarter also what will be the due date for payment of service provided for the month of march as the billing will be done on 7th April.

    1. In above case due date should be 5th of next month from billing month.Suppose.we assume that your client is Individual/Firm.

      For example
      1)services provided in December,12 Bill issued on 07/01/2013 due date shall be 31st March.
      2.However for March service ,for which bill raised on 05.04.2013 due date will be 05.07.2013

  5. Hi all,
    Thanks for the info. Can any of you kindly guide me with below query. Thanks in advance.

    In that case can an individual opt for receipt basis of payemnt of ST if his last year t/o is 70 Lacs & his current year t/o is expected to be 40 Lacs?

    1. No ,if last year (previous year) t/o is more than 50 lakh then he can not opt for service tax payment on receipt basis.