TMI Blogadjustment of service tax on foreign currency advancesX X X X Extracts X X X X X X X X Extracts X X X X ..... Background 1. Assessee is a foreign company executing projects in India 2. All its billings to the clients are in Foreign currency 2. Assessee receives advances in FC from its Indian client 3. Assesse e deposits service tax payable on such advances after converting the FC into Rupees at prevailing exchange rates 4. Assessee adjusts these FC against its regular invoices raised suseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uently for services rendered and pays service tax on the adjusted FC invoices ( ie gross invoice in FC less prorata advance in FC ) Issue 5. Service tax officials insist on fresh conversion of the FC advance sought to be adjusted at rates prevailing on adjustment dates 6. contention of Assessee is that service tax liability on advance has already been adjusted at time of receipt an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no further valuations are called for . Reference of similar cases would be appreciated - Reply By Seetharaman K C - The Reply = It is clearly provided that service tax is payable on Advances received upon reciept irrespective of the date of provision of service or the date of raising of the invoice. This is clearly specified in the Point of Taxation Rules,2011 . As per these Rules po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int of taxation is - the time when the invoice for the service provided or agreed to be provided is issued; if invoice is not issued within prescribed time period( 30 days except for specified financial sector where it is 45 days) of completion of provision of service then the date of completion of service; the date of receipt of payment where payment is received before iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uance of invoice or completion of service. After such clear provisions if the department is trying to take a different rate of exchange as on the date of issuance of the invoice probably because of the fact that it is advantageous to revenue , I think it is ill founded and should not be accepted. The contention of the department should not be accepted. - Reply By smruti samant - The Reply = ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... please let me know if this query is resolved ? - adjustment of service tax on foreign currency advances - Query Started By: - GSV Prasad Dated:- 3-11-2012 Service Tax - Got 2 Replies - Service Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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