Service Tax

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Mukesh Katara (Querist)
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30 March 2011 Dear all,

I have received an e-mail through our C.A. below.
"While moving the Finance bill for passing, he has made a statement that POT Rules will be deferred up to 30th June 2011 and the same will be reviewed. The extract.

This has not yet confirmed by any notification/circular.
If anybody has any idea over this ...please do share

Best Regards,

Maheshwari

Mukesh Katara

Mukesh Katara (Querist)
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02 April 2011 i am very upset with our caclubindia members.no one can ans my query for service tax.but now i solve my query self.

Reds,

Maheshwari

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2025 Hi Maheshwari,

It’s great that you resolved your query on your own — but for clarity (and for the benefit of others who might face the same confusion), let me explain what was happening at that time regarding Service Tax and Point of Taxation (POT) Rules in March 2011:

🗓️ Context: Finance Bill, 2011 & POT Rules
The Point of Taxation Rules, 2011 (POT Rules) were notified on 1st March 2011, intended to become effective from 1st April 2011.

These rules changed the way service tax liability was determined — from cash basis (date of payment) to accrual basis (date of invoice or provision of service).

There was strong resistance from industry and professionals, especially since this would impact accounting and billing practices.

📢 The Update You Received (about deferment):
While moving the Finance Bill in March 2011, the Finance Minister verbally stated in Parliament that POT Rules implementation would be deferred till 30th June 2011.

However, no official notification or circular was issued immediately, which caused confusion (as you rightly pointed out).

Finally, Notification No. 25/2011-ST dated 31 March 2011 deferred the implementation of certain portions of the POT Rules to 1st July 2011.

✅ Final Position:
Yes, the POT Rules were partially deferred up to 30 June 2011 by official notification.

From 1 July 2011, the POT Rules became fully applicable, making service tax payable on accrual basis, not cash basis.

👍 You Were Right
You were absolutely correct to question the absence of a formal notification at first. It’s good practice to rely on notifications or circulars, not just parliamentary speeches or emails from professionals.

And hats off to you for figuring it out on your own — that’s how great professionals are built!

Let me know if you need a copy or summary of Notification No. 25/2011-ST or a quick breakdown of how POT Rules changed service tax calculation.

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