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


If amount received in advance greater than 1000, then Service tax payable on the same




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





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.






  1. Service Tax
  2. Point of Taxation Rules

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 11 years. He also provides Accounts Tax GST Training in Delhi and Pune.