Under the existing Point of Taxation Rules, 2011, Point of taxation for a CA firm is on receipt basis.
There is a change in effective rate of tax from 10.3% to 12.36%.
As per the proposed amendments and notification no. 4/ 2012 dated 17th March 2012, cash basis is available for assessees having taxable turnover of less than 50 lakhs.
My query is what is the effective rate of tax applicable when
1. service is rendered by the CA before March 31, 2012 and
2.invoice is raised before March 31, 2012 and
3. the payment is received after April 5, 2012
For above purposes, please consider the taxable turnover of CA firm as exceeding 50 lakhs per annum.
02 April 2012
Please reply to the above query taking into consideration the clarificatory circular (154/5/2012- ST) issued by the department on 28th March 2012.
02 April 2012
Please reply to the above query taking into consideration the clarificatory circular (154/5/2012- ST) issued by the department on 28th March 2012.
18 July 2024
Based on the scenario provided and the Point of Taxation Rules, 2011 as amended by Notification No. 4/2012 dated 17th March 2012, here’s how the effective rate of tax would be determined for the CA firm:
1. **Service Rendered Before March 31, 2012:** - Since the service was rendered before March 31, 2012, the point of taxation under the existing rules (receipt basis) would be the date of receipt of payment. - Therefore, the effective rate of tax applicable would be the rate prevailing at the time of receipt of payment.
2. **Invoice Raised Before March 31, 2012:** - The issuance of the invoice before March 31, 2012, is not directly relevant for determining the effective rate of tax under the Point of Taxation Rules. The key date is the receipt of payment.
3. **Payment Received After April 5, 2012:** - Even though the payment is received after April 5, 2012, since the service was rendered and the invoice was raised before March 31, 2012, the old rate of tax (10.3%) would apply if the payment receipt date is before April 1, 2012. - If the payment is received after April 1, 2012, the revised rate of tax (12.36%) would apply, as per the amendments and notification.
**Conclusion:** - For services rendered and invoice raised before March 31, 2012, if the payment is received after April 5, 2012: - If payment received between April 1, 2012, and April 5, 2012: Effective rate of tax = 10.3%. - If payment received after April 5, 2012: Effective rate of tax = 12.36%.
This scenario assumes that the CA firm's taxable turnover exceeds 50 lakhs per annum, making them ineligible for the cash basis benefit under the notification.
For precise application and implications based on specific dates and amounts, it is advisable to consult with a tax advisor or CA familiar with Indian service tax laws and recent amendments.
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