Under Service tax act , "Company can adjust service tax amount in future bill of customer . "
For instance : As per instructions from Govt. of India service tax had been revised from 12.36 % to 10.30% w.e.f. 24 Feb 2009 , but HFCL infotel ltd. takes payment of Internet service 16th . So , in 16Feb. 2009 , HFCL infotel ltd. charged service tax 10.30% instead of 12.36% . Now HFCL collected less service tax from 16 Feb. 2009 to 23 Feb. 2009 . This can be adjusted from customer in future . Now company adjust this in 16 May 2009 . The difference of service tax to be charged is 2.06 % from 16 Feb. 2009 to 23 Feb. 2009 under service tax variation provision
Suppose my Internet bill is Rs. 444
I will also pay service tax variation to above company
444 X 12.36 - 10.30 / 100 X 8/28 = Rs. 2.6 or Rs . 3
I will also pay current month service tax 10.30%
444 X 10.30% = 45.73
I will pay total of above amount = 492.73
Accounting Effect , if company will not apply the provision relating to service tax variation
- Service tax is indirect tax , it means all burden of service tax liability is shifted on customers . If service tax variation provision did not apply , then this variation amount was given by company to govt. department . So , it will decrease company profit .
- Because service tax variation is just difference between actual and old service tax amount and if customers will not pay that amount , customers profit will excess which is not tree and this is false window dressing of customers profit .
So , it is the duty of company that it should add customers bill as soon as company knows the difference .