CERTIFICATE COURSE ON INDIRECT TAXES –
SERVICE TAX
by
g. natarajan
advocate, swamy associates
POINT OF TAXATION RULES
 Introduced vide Notification 18/2011 ST Dt. 01.03.2011.
 Effective from 01.04.2011 / 01.07.2011.
 Good Bye to realisation based Service Tax payment – Rule 6 of ST Rules,
1994.
 Not applicable to Individuals, Proprietary concerns & Partnership firms
of
- Chartered Accountants.
- Cost Accountants.
- Company Secretaries.
- Architects.
- Interior Decorators.
- Legal services.
- Scientific and Technical Consultancy services.
- Consulting Engineers.
Rule 6 of the Service Tax Rules
6. Payment of service tax. The service tax shall be paid to the credit
of the Central Government,
(i) by the 6th day of the month, if the duty is deposited electronically
through internet banking; and
(ii) by the 5th day of the month, in any other case,
Immediately following the calender month in which the service is
deemed to be provided as per the rule framed in this regard.
Rule 2(e) of the Point of Taxation Rules
“Point of taxation means the point in time when a service shall be
deemed to have been provided”
Rule 3 of the Point of Taxation Rules
3. Determination of point of taxation.- For the purposes of these
rules, unless otherwise provided, 'point of taxation' shall be,(a) the time when the invoice for the service provided or to be provided
is issued:
Provided that where the invoice is not issued within fourteen days of
the completion of the provision of the service, the point of taxation
shall be date of such completion.
(b) in a case, where the person providing the service, receives a
payment before the time specified in clause (a), the time, when he
receives such payment, to the extent of such payment.
Explanation.- For the purpose of this rule, wherever any advance by
whatever name known, is received by the service provider towards the
provision of taxable service, the point of taxation shall be the date of
receipt of each such advance.”.
Provision of Service or Issue of Invoice or
Receipt of Payment – whichever is earlier –
Is the point of taxation.
S.No. Date on which service Date on which invoice Date on which Point of Taxation
was provided
was issued
payment
was
received
1
10th July 2011
15th July 2011
15th August 2011
15th July 2011
2
10th July 2011
15th August 2011
15th September 10th July 2011
2011
3
10th August 2011
5th July 2011
15th August 2011
5th July2011
4
10th September 2011
5th September 2011
5th August 2011
5th August 2011
Month
Customer
July 2011
July 2011
July 2011
Aug 2011
Aug 2011
Aug 2011
Aug 2011
Aug 2011
Aug 2011
Aug 2011
Aug 2011
Aug 2011
X
Y
Z
X
Y
Z
X
Y
Z
A
B
C
What I did?
Provided service
Received advance
Issued Invoice
Issued Invoice
Provided service
Received Payment
Received Payment
Issued Invoice
Provided service
Received advance
Provided service
Issued Invoice
ST to be paid on
05.08.2011
05.08.2011
05.08.2011
Already paid
Already paid
Already paid
Already paid
Already paid
Already paid
05.09.2011
05.09.2011
05.09.2011
CONTINUOUS SUPPLY OF SERVICE
 “continuous supply of service” means any service which is provided, or to
be provided continuously, under a contract, for a period exceeding three
months & services specifically notified, viz., commercial or industrial
construction, construction of complex, telecommunication, internet
telecommunication & works contract.
 Explanation 1.– For the purpose of this rule, where the provision of the
whole or part of the service is determined periodically on the completion of
an event in terms of a contract, which requires the service receiver to make
any payment to service provider, the date of completion of each such event
as specified in the contract shall be deemed to be the date of completion of
provision of service.
 Circular No. 144/13/2011 Dt. 18.07.2011.
SPECIAL PROVISIONS
 For export of services, POT shall be the date of receiving payment.
(But payment should be received within the time prescribed by RBI).
 Reverse Charge Liabilities – Date of making payment.
(But payment should be made within 6 months)
 Associated enterprises – date of credit in books / date of payment
whichever is earlier.
 IPR Services – when payment is made / received.
MISCELLANEOUS
 Adjustment of ST paid, if service is not provided (wholly or partially)
or the value is renegotiated, subject to refund / credit note in
favour of the customer {Rule 6(3) of ST Rules, 1994}.
 No relief for Bad Debts.
POT IN CASE OF CHANGE OF ST RATES
Service provided before change of rate
Issue of Invoice
After change of rate
Receipt of
Payment
After Change of rate
Before change of
rate
After Change of rate
After Change of Rate
Before Change of
Rate
POT
Date of Invoice or
Date of payment,
whichever is earlier
– New Rate will
apply
Rule 4 (a) (i)
Date of Invoice –
Old Rate will apply
Rule 4 (a) (ii)
Date of payment –
Old Rate will apply
Rule 4 (a) (iii)
Service provided after change of rate
Issue of Invoice
Before change of
rate
Receipt of
Payment
After Change of rate
Before change of
rate
Before Change of
rate
After Change of Rate
Before Change of
Rate
POT
Date of Payment–
New Rate will apply
Rule 4 (b) (i)
Date of Invoice or
Date of payment
whichever is earlier–
Old Rate will apply
Rule 4 (b) (ii)
Date of Invoice –
New Rate will apply
Rule 4 (b) (iii)
Applicability of change of rate – Service provided
before change of rate.
(Assuming the service provider has opted for POT from 1st April 2011 and
the rate of tax changed on 1st July 2011)
Date of provision of Date of Invoice
service
Date of receipt of Point of taxation
payment
and applicable rate.
June 2011
1st July 2011
1st August 2011
1st July 2011 – New
rate
June 2011
1st August 2011
1st July 2011
1st July 2011 – New
rate
June 2011
30th June 2011
15th July 2011
30th June 2011 – Old
Rate
June 2011
15th July 2011
30th June 2011
30th June 2011 – Old
Rate
Applicability of change of rate – Service provided
after change of rate.
(Assuming the service provider has opted for POT from 1st April 2011
And the rate of tax changed on 1st July 2011)
Date of provision of Date of Invoice
service
Date of receipt of Point of taxation and
payment
applicable rate.
July 2011
30t June 2011
1st August 2011
1st August 2011 –
New rate
July 2011
1st May 2011
30th June 2011
1st May 2011 – Old
rate
July 2011
30th June 2011
1st May 2011
1st May 2011 – Old
Rate
July 2011
15th July 2011
30th June 2011
15th July 2011 – New
Rate
Thank you
g. natarajan
93400 54477
mail@swamyassociates.com