1)Point of Taxation Rules were made w.e.f. 1-4-2011 mainly to provide that service tax will be payable on accrual basis. The exception is that where value of taxable services in previous year were less than ` 50 lakhs, service tax can be paid on receipt basis (i.e. cash basis) instead of accrual basis.
2)Rule 6(1) of Service Tax Rules states that service tax shall be paid to the credit of Government by 5th/6th of the month/quarter immediately following the month/quarter in which service is deemed to be provided.
3)‘Point of taxation’ means the point in time when a service shall be ‘deemed to have been provided’ [Rule 2(e) of Point of Taxation Rules, 2011]. This point will determine due date of payment of service tax. Rate of tax as per section 67A w.e.f. 28-5-2012 and not as per POT Rules.
4)The general rule is that the point of taxation will be Date of invoice if issued within 30/45 days [rule 3(a)] If invoice not issued within 30/45 days, date of completion of provision of service is Point of Taxation. If advance is received prior to provision of service, that date will be Point of Taxation.
5)Construction, telecom, works contract, renting, insurance, security are continuous service where service continues for more than 3 months. If determined periodically (e.g. monthly like telephones, credit cards, renting) then each such period is date of completion of service. Date of Invoice is Point of Taxation.
6) If not determined periodically, completion of each event as specified in contract will be POT is date of completion of provision of service (e.g. plinth, first slab, second slab, plaster etc.). Thus, each milestone as specified in agreement will be a separate Point of Taxation for purpose of due date of payment of service tax. Date of Invoice is Point of Taxation .If invoice not issued within 30 days from date of completion of service, then date of completion of service is taxable event. If advance is received, that date is POT even if invoice is not issued.
7)In case of advance, Invoice can be issued only after receipt of advance. Thus, mere letter asking customer to pay advance is not an Invoice. In case of continuous supply service (like telephones, payment of credit card etc.), if advance upto ` 1,000 received, then payment of service tax can be when service is provided and not when advance received – relief in case of advance payments received from customers
27 October 2013
1)In case where service ax is payable under reverse charge –
Date of payment is POT if payment is made to service provider within 6 months.. Otherwise, invoice date or completion of service (if invoice not issued within 30 days) becomes POT – interest is also payable.
When service provider is outside India, date of credit in books of account of person receiving the service in taxable territory or date of payment whichever earlier is POT, in case of ‘associated enterprise’ [second proviso to rule 7 inserted w.e.f. 1-4-2012].
2)Cenvat Credit on Invoice – Cenvat credit can be taken on receipt of invoice. However, if payment is not made within 3 months, the Cenvat credit is required to be reversed.
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