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Point of taxation

Ashish (student) (366 Points)

12 April 2012

Related to Point Of taxation: Rule 5:

If service is provided before the levy of Service tax and payment received after service tax levy, Will service tax be imposed on that service?

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6 Replies

Mihir Doshi (B.Com, CA, CS, LLB) (2187 Points)
Replied 12 April 2012

Dear Ashish,

Explanation of Point of Taxation Rules in layman's language:

If service provided before 31st March 2012, there may be two situation with respect to receipt of income as well raising of invoice.

If Invoice is raised before 31st March 2012 but Payment received after 1st April 2012 then Rate of service tax would be 10% otherwise 12% .

In nutshell, Out of three events i.e. Provision of service, Raising of invoice and Receipt any of two events happened before 31st March 2012 then Service tax would be 10% and vice a versa i,.e. 12%.

Hope you would have understood the simplicity of POT rules.

Thanks

Mihir Doshi

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Akhilesh Kapadia (Employee) (106 Points)
Replied 12 April 2012

Where ST is not us not liable the question of its liability does not arises. Henceforth no ST when it is not taxable when provided where it is not taxable.

Ashish (student) (366 Points)
Replied 13 April 2012

I haven't understood the points of both replier.

My question is:

say A is providing services to his clients long before and that service was exempt from tax but on 1-5-2011 notification comes and that service is also subject to service tax. Now in regards to one of his client he has provided service before 1-5-2011 but payment for that service was received on 10-5-2011. Invoice for that is issued on 15-5-2011. Now whether that service which is provided for 10 lakh say be taxed? Reason with the reference of pot rules

nikila (student) (42 Points)
Replied 14 April 2012

The taxable event for the purpose of rate would be when the services are provided or rendered and not in the raising of invoice for making payment.

as per the decission of gujarat high court in the case of CCE v Schott Glass India

Dilip Darji (392 Points)
Replied 14 April 2012

Dear Sir.

In this case the date of completion of Service is 15/03/2001 (prior to 10/05/2011). Service became taxable from 01/05/2011. Payment received on 10/05/2001. Invoice issued on 15/05/2011. The Point of taxation would be 15/03/2011. On the date of point of taxation Service was not taxable so not tax.

Get the opinion of others also.

DILIP DARJI.

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pulkit kahlya (md) (64 Points)
Replied 19 April 2012

dilip sir I think this service is taxable bcoz the bill raise on 15-05-11 n dis service is appicable 4rm 1-5-11 so it is taxable if bill raise before 1-5-11 in dat case dis service is not taxable......