Facing Delayed Payments and Service Tax Issues with Government Contracts – How Do You Manage?

Hi, the problem is, we are a labor supplier in a government organization. We are raising the invoices with service tax, but our payments are delayed significantly as the principal employer issues the payment as and when funds are available. Even though they do not pay us the service tax upfront, they instruct us to deposit the service tax and present the challans. After that, they reimburse the payment. Now, the service tax department is claiming interest for the delay in payment from me. Please help me out.

Service Tax Deposit Requirements

As per the revised Service Tax rules, you need to deposit Service Tax irrespective of the receipt of payment. You have to deposit tax on a monthly basis immediately after raising the invoice.

The Service Tax department is right in claiming interest on delayed deposits.

Regards

Service Tax Payment Concerns

The central exercise department is not right. Can you pay service tax from your pocket? We are in business, and due to this, we are required to pay service tax. If I have to pay service tax within the month and the principal employer does not pay, where will I pay the service tax from? The principal employer is not answerable and hence not bothered.