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Amended Rule

Point of Taxation Rules – Pre Amendment

Point of Taxation Rules – Post Amendment

7

This rule provided for determination of point of taxation only in case of associated enterprise.

The rule has been substituted to the following effect:

 

Notwithstanding anything contained in the rules, point of taxation in the following cases shall be the date on which payment is received or made, as the case may be

 

1.       Export of services;

2.       The persons required to pay tax as recipients under the rules made in this regard in respect of services notified under sub-section (2) of section 68 of the Finance Act, 1994

3.       Following services provided by individuals or proprietary firms or partnership firms:

a.       Architect’s service;

b.      Chartered accountant’s service;

c.       Cost accountant’s service;

d.      Interior decorator service

e.      Company secretary’s service

f.        Scientific or technical consultancy service;

g.       Legal services;

 

In case of “associated enterprises”, where the person providing the service is located outside India, point of taxation shall be the date of credit in the books of account of the person receiving the service or date of making the payment whichever is earlier.

3

Point of taxation shall be:

 

a.       Date of provision or service; or

b.      In case an invoice is issued or payment is received before the provision of such service, the date of issuing of invoice or receipt of payment, whichever is earlier.

 

In case of receipt of advance, point of taxation shall be the date of such receipt.

Further, in case of import of service under Section 66A, the point of taxation shall be the date of issuing of invoice or date of payment, whichever is earlier.

Point of taxation shall be:

 

a.       Date of issuing of invoice.

b.      In case the invoice is not issued within 14 days of completion of provision of service, the date of such completion.

c.       In case payment is received before issuing an invoice, the date of receipt of such payment.

 

In case of receipt of advance, point of taxation shall be the date of such receipt.

4.

This rule provides for determination of point of taxation in case of change of rate of tax.

 

Clause (iii) of sub-rule (b) provides that in case the taxable service has been provided after the change of rate and the invoice has also been raised after the change of rate but the payment has been received before the change of rate, the point of taxation shall be date of issuing of invoice.

The following explanation has been added after clause (iii) of sub-rule (b):

 

“Explanation:- For the purposes of this rule, “change in effective rate of tax” shall include a change in the portion of value on which tax is payable in terms of a notification issued under the provisions of Finance Act, 1994 or rules made thereunder.”

 

Further, the terms ‘change in rate of tax’ or ‘change of rate’, ‘change in tax rate’, have been substituted with “change in effective rate of tax”.

6

This rule provided that point of taxation in case of continuous supply of services.

 

In case of continuous supply of service, the whole or part of which is determined or payable periodically or from time to time, shall be treated as separately provided at the date on which the payment is liable to be made by the service receiver, if such date is specified in the contract.

 

If, before the time specified above, the person providing the service issues an invoice or receives a payment, the service shall, to the extent covered by the invoice or the payment made thereof, be deemed to have been provided at the time the invoice was issued or the payment was received, as the case may be, whichever is earlier.

 

 

This rule has been amended to state that point of taxation in case of continuous supply of service shall be:

 

a.       Date of issuing of invoice.

b.      In case the invoice is not issued within 14 days of completion of provision of service, the date of such completion.

c.       In case a payment is received before issuing an invoice, the date of receipt of such payment.

 

Following explanations have also been inserted:

 

Explanation 1. –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.

 

Explanation 2.- 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.

9

Rule 9 provides for saving in cases of invoices raised before notification of these rules.

The rule has been amended to provide to specify that for services provision of which is completed on or before 30th day of June, 2011 or where the invoices are issued upto the 30th day of June, 2011, the point of taxation shall, at the option of the taxpayer, be the date on which the payment is received or made as the case may be.

 

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Category Service Tax, Other Articles by - CA Kaushik Darji 



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