Point of taxation

This query is : Resolved

PRAVIN KOKAM (Querist)
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18 October 2013 Service Tax is payable on receipt of advance if any one can clarify under which rule of point of taxation this is being done. This is require for the purpose of filling Service Tax Return.

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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18 October 2013 Rule 3 of the Point of Taxation Rules lays down the point when the service rendered becomes liable to tax. Three conditions are envisaged : 1)The time when the service is rendered; 2)The time when the invoice for the service rendered or to be rendered is issued; and 3) When payment is received; whichever is earlier.

As per the other rules, the point of taxation is the date of issue of invoice (to be issued within 30 days of completion of service, otherwise the date of completion will be treated as the point of taxation) or the date of receipt of payment whichever is earlier.

Since advance in cash/cheque is receipt of payment the point of taxation is the date of receipt of the advance.

Hence on every date of receipt of advance liability to service tax arises.