SERVICE TAX – POINT OF TAXATION RULES
For Nov. / Dec. 2012 Exams
RULE – 1
The Rules come into effect from 01-04-2011. Option has also been given to follow rules from 01-07-2011.
RULE -2 -> DEFINITIONS
Continuous Supply of Service[Rule 2(c)]— It means any service which is provided, or to be provided Continuously under a contract, for a period exceeding 3 months with the obligation for payment periodically or from time to time.
RULE 2A: DATE OF PAYMENT
Date of payment =
- D/o entry in the books of account of the assessee or
- D/o credit in the Bank pass Book,
- Whichever is EARLIER.
Proviso :-
(A) D/o payment is D/o credit in the Bank Pass Book
- When there is a change in effective rate of tax or when a service is taxed for the first time during the period between Cash book entry and pass book entry.
- When the pass book entry is after 4 working days from the date of change in effective rate or from the date of first time levy of tax.
- When the payment is made by way of an instrument ( cheque, DD, etc ) credited to bank account.
(B) For purpose of any rule requiring the determination of “Date of Payment”, such date will be the date of receipt of payment.
RULE – 3 DETERMINATION OF POT
|
RULE |
EVENT |
POINT OF TAXATION |
|
3(a) |
If Invoice is issued within 30 days of completion of service. |
Date/Time of invoice |
|
3(a) proviso |
If Invoice is NOT issued within 30 days of completion ofservice |
Date of completion of service |
|
3(b) |
If any payment is received ( including advance ) before the date of completion of service or date of invoice. |
Date of receipt of Payment. |
Determination of POT in case of CONTINUOUS SUPPLY OF SERVICE
| EVENT | POINT OF TAXATION |
| If Invoice is issued | Date/Time of invoice |
| If Invoice is Not issued within 30 days of completion of service. | Date of completion of service |
| If any payment is received ( including advance ) before the completion of service or date of invoice | Date of receipt of payment |
RULE - 4 DETERMINATION OF POT IN CASE OF CHANGE IN EFFECTIVE RATE OF TAX
Rule 4 shall have overriding effect over the provisions of Rule 3. The POT in cases where there is a change in effective rate of tax in respect of a service, shall be determined in the following manner --
(A) Services provided before change in effective rate of tax
| RULE | EVENT | POINT OF TAXATION |
| 4(a)(i) | Invoice issued and payment is received after change |
|
| 4(a)(ii) | Invoice issued before change but payment received after change | Date of Issue of Invoice |
| 4(a)(iii) | Invoice issued after change but payment received before change | Date of Payment |
(B) Services provided after change in effective rate of tax
| RULE | EVENT | POINT OF TAXATION |
| 4(b)(i) | Invoice issued and payment is received after change |
|
| 4(b)(ii) | Invoice issued before change but payment received after change | Date of Payment |
| 4(b)(iii) | Invoice issued after change but payment received before change | Date of Issue of Invoice |
RULE 5 -- PAYMENT OF TAX IN CASE OF NEW SERVICES
| RULE | EVENT | POINT OF TAXATION |
| 5(a) | Invoice issued and payment received before service became taxable | NO Service Tax |
| 5(b) | Payment received before service became taxable and invoice issued within 14 days of the date when the service is taxed for the first time. | NO Service Tax |
RULE -7 -- DETERMINATION OF POT IN CASE OF SPECIFIED SERVICES OR PERSONS
| RULE | EVENT | POINT OF TAXATION |
| 7 | In reverse charges cases falling u/s 68(2), | Date of payment |
| Proviso - 1 | If service receiver does not make payment within 6 months from the date of invoice |
As per Rule 3,4,5,or 8, as the case may be. |
| Proviso - 2 | Service provider outside and the Service Receiver in India are "Associated enterprises" |
|
Rule 8-A DETERMINATION OF POT IN OTHER CASES
( Residual Rule )
- Date of invoice / payment not available
- CEO may call for production of any other document
- Hear the assessee
- And then determine POT to the best of his judgment.
Thannks & Regards
@ Vipul Jain @
CAclubindia
