serivce tax on Advance amount received but invoice not raised?

Question

we have recieved advance towards services but we have raised only one invoice(out of 5)

Answer 1

With amended Section 67 of the Finance Act, 1994 , advance payment towrds taxable services are liable to Service Tax. Central Board of Excise & Customs have issued clarification vide F.No.B1/ 6 /2005-TRU dated 27.07.2005 (para 27 and 27.2) which are under :


27. Amendments have been made in section 65(105), section 67 and rule 6 of Service Tax Rules, 1994 to link payment of service tax with the receipt of payment for the taxable services provided or advance payment received towards taxable services to be provided in future. When payments relatable to taxable services are received during the course of provision of service, service tax is liable to be paid to the extent of receipt of payment. In other words, a person is liable to pay the tax as soon as the consideration towards the taxable services is received.


27.2 However, when advance payment is received for a service which is non-taxable at the time of receipt of payment but becomes taxable during the course of provision of service, such payments would have to be apportioned appropriately between the two periods and that part of service provided on or after the service becomes taxable service, is only liable for service tax. Similarly, when payment is received in advance for services to be provided but subsequently the services are not actually provided, then in such cases service tax paid is liable to be refunded.

So. you are liable to pay service tax on the advance payments received as consideration of taxable services.

Answer 2

Service Tax is deductible, on Advance. It will be adjusted, against full payment against, your invoice, when your advance is adjusted.

Answer 3

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