Service tax on advance received, Service Tax

[Mnaoj Kumar Sharma]

Sir, I need your valuable support. My company having rent income is receiving advance rent at the time of signing contrat for 6 months and this is being adjusted some percentage in every month. Our practice is that we are paying service tax on monthly rent received including this adj. amount ( ST is not paid on advance received). Kindly suggest whether we should deposit ST on advance received or this practice is o.k. Thanks

Posts / Replies

[CA. R.K.Aggarwal]

In terms of sec 67(3), gross amt shall include any amt received befor,during or after provision of service. Hence any advance payment recd. shall form part of taxable service and s.tax is to paid at the time of receipt of advance itself.

[V Ramanujam]

If the amount received is 'advance rent', then Service tax is to be paid on the entire amount at the time of 'receipt of the money'. However, if the amount received is rent deposit as per the agreement, which is in turn adjusted against rent, then different view can be taken.

[shirish nagchandi]

in case any advance amount is received and the services will be given later on the service tax should be deposited at the time of advance received.