Point of taxation

This query is : Resolved

Shivani (Querist)
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17 January 2014 Dear Members

Consider the following two cases:

Case 1

Date of completion of service 1-4-13
Date of Invoice 10-4-13
Date of receipt of payment 7-4-13

Case 2

Date of completion of service 1-5-13
Date of Invoice 10-5-13
Date of receipt of payment 20-4-13

My questions

1. What date the service tax will be attracted in above cases as per Point of Taxation Rules?

2. What shall be entries in books of both Service Provider and Service Receiver in both above cases?

3. What is advance? Is it when we receive money before the date of invoice as in case 1 OR is it when we receive money both before the date of invoice as well as completion of service as in case 2?

Thanks

Shivani

shivaniadream@gmail.com

Nikhil Kaushik

Nikhil Kaushik (Expert)
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18 January 2014 in both the cases the point of taxation shall be on the date of receipt of money as it has been received before the date of invoice.

the service receiver shall pass normal entries for payment of advance to the vendor..

with regards to service provider he/she need to pass entries for service tax on the date of receipt of money..

advance should be construed in the normal business parlance..in the above two cases, on accrual basis, in case 1, it is not an advance per say as the money has been received after the provision of services. However, in case 2, it has been provided before the provision of services, therefor is an advance.

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