Advance payments for the taxable service

As per Rule 6 of the service Tax Rules, 1994 (‘the Service Tax Rules’), service tax is required to be paid to the Government by the 5th of the month immediately following the calendar month in which the payments are received towards the value of taxable services. The liability to pay service tax arises on receipt of the payment for the service already provided or to be provided to a client. Therefore, service provider is also required to pay service tax on the advance payment received for the services which are yet to be provided by him. However, in case, service is not provided either wholly or partly for any reason and service provider refunds the amount to the client, the service provider may adjust the excess service tax so paid by him (calculated on a pro rata basis) against his service tax liability for the subsequent period . Further, if the service provider has received payment attributable to a service provided by him during the period when such service was not taxable, he is not required to pay service tax to that extent.