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Point of taxation

RITESH KUMAR JAIN (CA IN PRACTICE) (118 Points)

13 January 2012

is it true that as per point of taxation rules,2011 w.e.f. 1/4/11 service tax is to be paid on billing basis whereas earlier it was on the basis of receipt of payment of taxable service?

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5 Replies

CA Prabhat Gupta (Manager (Indirect Taxes)) (821 Points)
Replied 13 January 2012

Yes,

In most cases, Point of taxation has been made on accrual basis. Please refer to Notifications No.18/2011-ST attached below:

Attached File : 483027 906315 18 2011 point of taxation rules.pdf downloaded: 204 times

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CA Prabhat Gupta (Manager (Indirect Taxes)) (821 Points)
Replied 13 January 2012

Also refer to Notification No.25/2011-ST dated 31.03.2011 amending the above Point of Taxation Rules. It is more important to go through the amendments under the above Notification. The link for the same is given below:

https://www.servicetax.gov.in/notifications/notfns-2k11/st25-2k11.htm

CA ASHISH SHAH (CHARTERED ACCOUNTANT) (353 Points)
Replied 13 January 2012

The Point of Taxtion is applicable from 1.7.2011, Before that you can use any of two method as per my knowledge and Practical Exprience.

any means:

Receipt of Payment

Point of taxation

gopikrishna (Practicing Cost Accountant & Teacher) (127 Points)
Replied 17 January 2012

Service Tax is to be paid on accrual or receipt basis whichever is earlier.

If any advance is received before providing any taxable service, then it taxable on receipt of advance.

Point of taxation rules says Invoice need to be issued within 14 days of providing taxable service, then taxable point will de the date mentioned in the invoice.

If invoice is not issued within 14 days then point of taxation will be the date when the taxable service is provided.

As rightly pointed out by "Ashish" there is an option to follow any of the two methods upto 30.06.2011.

For Professional people point of taxation rule does not apply ie they can continue paying service tax on receipt basis for the entire year.