Point of Taxation - Illustration

Determination of Point of Taxation in accordance with Rule 3 of the Point of Taxation of Rules , 2011

Date of Providing Service	Date of Invoice	Date of Payment	Status of Service	Point of Taxation under Rule 3	Remarks
01/06/2011	01/05/2011 (STP)	01/04/2011	STP	01/04/2011	Earliest of the three dates Point at which service will be deemed to be provided as per Rule 2(e) of Point of Taxation of Rules , 2011
		15/05/2011	STP	01/05/2011
		15/07/2011	SP	01/05/2011
	01/07/2011 (SP)	01/04/2011	STP	01/04/2011
		15/06/2011	SP	01/06/2011
		15/07/2011	SP	01/06/2011

*STP = Service to be provided
*SP = Service Provided

Rule 3 says that the Point of Taxation shall be earlier of the following :

(i) Provision of Service
(ii) Issue of Invoice
(iii) Receipt of Payment

Determination of Point of Taxation in accordance with Rule 4 of the Point of Taxation of Rules , 2011 IN CASE OF CHANGE OF RATE OF TAX AFTER THE DATE OF PROVIDING SERVICE

Date of Providing Service	Date of Invoice	Date of Payment	Date of change of Rate of Tax	Case	Basis of Point of Taxation under Rule 4	Point of Taxation under Rule 4	Point of Taxation under Rule 3
01/06/2011	01/05/2011 (STP)	01/04/2011	10/06/2011	N.A.	As per Rule 3	01/04/2011	01/04/2011
		15/05/2011	10/06/2011	N.A.	As per Rule 3	01/05/2011	01/05/2011
		15/07/2011	10/06/2011	Case II	Date of Issue of Invoice	01/05/2011	01/05/2011
	01/07/2011 (SP)	01/04/2011	10/06/2011	Case III	Date of Payment	01/04/2011	01/04/2011
		15/06/2011	10/06/2011	Case I	Date of Payment or Issue of Invoice whichever is earlier	15/06/2011	01/06/2011
		15/07/2011	10/06/2011	Case I	Date of Payment or Issue of Invoice whichever is earlier	01/07/2011	01/06/2011

Taxable Service provided before the date of change of rate :

Case	Date of Invoice	Date of Payment	Point of Taxation Under Rule 4
I	After the date of change of rate	After the date of change of rate	Date of Payment or Issue of Invoice whichever is earlier
II	Prior to Date of Change of Rate	After the date of change of rate	Date of Issue of Invoice
III	After the date of change of rate	Prior to Date of Change of Rate	Date of Payment

Determination of Point of Taxation in accordance with Rule 4 of the Point of Taxation of Rules , 2011 IN CASE OF CHANGE OF RATE OF TAX BEFORE THE DATE OF PROVIDING SERVICE

Date of Providing Service	Date of Invoice	Date of Payment	Date of change of Rate of Tax	Case	Basis of Point of Taxation under Rule 4	Point of Taxation under Rule 4	Point of Taxation under Rule 3
01/06/2011	01/05/2011 (STP)	01/04/2011	20/07/2011	Case II	Date of Payment or Issue of Invoice whichever is earlier	01/04/2011	01/04/2011
		15/05/2011	20/07/2011	Case II	Date of Payment or Issue of Invoice whichever is earlier	01/05/2011	01/05/2011
		15/07/2011	20/07/2011	Case I	Date of Payment	15/07/2011	01/05/2011
	01/07/2011 (SP)	01/04/2011	20/07/2011	Case III	Date of Issue of Invoice	01/07/2011	01/04/2011
		15/06/2011	20/07/2011	N.A.	As per Rule 3	01/06/2011	01/06/2011
		15/07/2011	20/07/2011	N.A.	As per Rule 3	01/06/2011	01/06/2011

Taxable Service provided after the date of change of rate :

Case	Date of Invoice	Date of Payment	Point of Taxation Under Rule 4
I	Prior to Date of Change of Rate	After the date of change of rate	Date of Payment
II	Prior to Date of Change of Rate	Prior to Date of Change of Rate	Date of Payment or Issue of Invoice whichever is earlier
III	After the date of change of rate	Prior to Date of Change of Rate	Date of Issue of Invoice

From the above illustration, it is very much obvious that there is a contradiction in determination of Point of Tax under Rule 3 and Rule 4. Both these rules suggest different point of tax on different occasions or events when change in the rate of tax takes place at three different points of time viz. Date of Provision of Service, Date of Payment or Date of Issue of Invoice.