Payment of Service Tax by HR Recruitment Firm

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  1. Alhad Sadachar

    Alhad Sadachar New Member

    We are a very small Pvt Ltd company and have tremendous problem in paying service tax in advance as we need to pay it immediately after raising invoice before 5th of next month.We are into business of recruitment services and never get our payments in short span.Sometimes,it takes 5-6 months for getting payments.Apart from this,many times we do not get payments if the candidate leaves early.This way,lot of our money gets blocked in service tax payments.We had incidences ,where we were not having money to pay service tax and there is hefty penalty on delayed payment for service tax.What is the remedy ? Should we write to Finance minister or Prime minister directly ? It is better if the service tax payment is on receipt basis ( To be paid in the month of receipt of payment ).Many small entrepreneurs are facing trouble.
    Please advise.

    Alhad Sadachar
  2. Karan Batra

    Karan Batra Well-Known Member

    Individuals, proprietary concerns, partnership firms, Limited Liability Partnerships whose total value of taxable service is Rs.50 Lakhs or less in the previous financial year can opt to pay service tax on receipt basis instead of accrual basis.

    As you have registered a company - you cannot claim the benefit of service tax payment on receipt basis
  3. Alhad Sadachar

    Alhad Sadachar New Member

    Thanks.I know that this is not possible as per company act but how should we manage this as a small company.In our business,we are not sure when shall we get the payment nor we are sure whether we will get payment at all....Already it is expensive to maintain compliance for Pvt ltd company as they are same irrespective of turnover.This does mean that government does not want that small businessman should set up a company.Where should I write about it ?
  4. Karan Batra

    Karan Batra Well-Known Member

    If its a small organisation - you should have opted for Partnership Firm or LLP. It will serve the same benefit as a Company

    Opting for Company Formation is not advisable in your case.

    PS: We never advise small organisations to apply for Company as we know there are a lot of legal hassles.
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