The Finance Ministry has reversed its earlier budget proposal that would make service tax payable by professionals such as lawyers when bills are issued rather than when they are paid, after protests and representations from lawyers that this would be unduly onerous.

The Government is reportedly re-examining the 2011 Finance Bill’s proposal to charge service tax on an accruals basis, which would force law firms to pay service tax as soon as they bill a client rather than when the cash is actually received.