How to File Service Tax Return for Accrual System

Dear Friends,

As you aware that Point of Taxation Rules are compulsorily applicable w.e.f. 01.07.2011. Therefore, service tax liability for July, 11 onwards period will consist of service tax on following components:-

a. Amount received towards Debtors outstanding as on 30.06.2011,

b. Amount received as advance, and

c. Invoice issued

However, till date department neither has made suitable changes in Service Tax Return nor has issued any clarification on how to disclose these figures in Service Tax Return. Our team has made a representation before CBEC to solve this type of issues encounter by a tax payer at the time of filling of Service Tax Return.

Till the time, suitable changes are made in Service Tax Return or any clarification is issued by department, we may accommodate in showing these components in following manner:-

a. Amount received towards Debtors outstanding as on 30.06.2011 plus amount of invoices issued should be disclosed under Point 3(F)(I)(a)(i) i.e. “Gross Amount Received in money against services provided”.

b. Amount received as advance should be disclosed under Point 3(F)(I)(a)(ii) i.e. “Gross Amount Received in money in advance for services to be provided”.

Here we would also like to mention that when an invoice has been issued for a service which is not subsequently provided, the assessee may take the credit of the service tax earlier paid by the issue of credit note. The amount of such credit adjusted from service tax liability of particular month should be disclosed under Point 4A(I)(a)(iii), Point 4A(I)(b)(iii), Point 4A(I)(b)(iii) i.e. “Service Tax paid by adjustment of excess amount paid earlier and adjusted in this period under Rule 6(3) of ST Rules”.

Hope the information will assist you in your Professional endeavors.

“Journey of transformation should continue”