In case
Service Provider receives amount greater than Invoice Amount
by upto 1000
no service tax shall be payable on such advance.
Point of taxation is
Invoice Issued
(or Service Provided if invoice not issued within 30 days)
Service tax NOT payable on advance
Note:-
If amount received in advance greater than 1000, then Service tax payable on the same
Example
Normally minor excess payment is received by service providers like telephone companies
Suppose Airtel sent a postpaid bill of 1000+ Service tax 14%=1140
Customer actually paid a Round figure of 1200
In this case, Rs 60 is advance received from customer
Since it is less than equal to 1000 ,no Service tax payable on it
Purpose
consequently, it is time consuming and difficult to pay service tax on such small advances
Hence, they have been given an option that if such excess amount is upto Rs 1000, no need to pay service tax on same excess.
