Consultant Bill, Accounting - Auditing

[Sanjay Vasava]

Dear Sir,

We hired a person as a consultant, We paid to him fixed amount on monthly basis. Recently he has submitted a bill in letter format, Not proper invoice format. Also he has mentioned, his FY 2016-17 income below 10Lacs.

My question is below.

Why required proper invoice for bill passing/payment ??

Please explain.

Thanks & Regards,

Sanjay Vasava

Posts / Replies

[KASTURI SETHI]

Letter has no value. Proper invoice is required. It should be signed and stamped with date. Income may be below 10 lakhs, proper invoice is must.

[YAGAY AND SUN]

If your consultant is an Advocate or a Lawyer, then, even if they don't use the prescribed format of invoice/bill under Rule 4A of the Service Tax Rules, 1994, then there is no harm in it. Since, they are not liable to pay the service tax. The service recipient is required to pay the service tax under reverse charge mechanism. The service recipient can avail the CENVAT credit on the challan through which they paid service tax under RCM.

Further, if your consultant do not come under the category of Advocate/Lawyer, then, he has to adherence with the compliance of service tax rules to issue an invoice/bill in prescribed format or having the prescribed ingredients.

We also endorse the view of Respected Kasturi Sir.

[Sanjay Vasava]

Thank you Both of Sir.

[MARIAPPAN GOVINDARAJAN]

I endorse the views of experts.

[Ganeshan Kalyani]

Rule 4A of Service Tax Rule 1994, prescribes that service provider shall raise proper invoice showing name and address of the service provider and service receiver, nature of service provided, basic amount, tax amount, invoice date, invoice number, registration number etc. Thus in view of the rule it becomes necessary to prepare proper bill.

Yes advocates are exempted from payment of service tax.