Point of taxation

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Aditya Kumar Narayan (Querist)

06 October 2016 Hi All,

Following is my query:

1) Date of invoice - 20th May 2015
2) Date of completion of service - 15th June 2015
3) Date of payment - 12th December 2015

Kindly note that the following:
1) Change in effective rate of tax from 1st June 2015 - 14%
2) Effective from 15th November 2015 (a new abatement notification comes - which again results in a change in effective rate of tax).

When is the point of taxation as this falls under both Rule 4(b)(i) as well as Rule 4(a)(ii)?

My understanding:
Using Rule 4(b)(i) - Relevant date for change in rate is 31st May 2015. Hence, 'After, Before, After'- Making Date of Payment as the point of taxation.
Using Rule 4(a)(ii) - Relevant date for change in rate is 14th November 2015. Hence, 'Before, Before, After' - Making Date of Invoice as the point of taxation.

Kindly help.

Rajat Aggarwal

Rajat Aggarwal (Expert)

07 October 2016 Point of Taxation id date of invoice i.e 20th may 2015

Aditya Kumar Narayan

Aditya Kumar Narayan (Querist)

08 October 2016 Hi Sir,

Could you please clarify the understanding?
As in why not date of payment?

Rajat Aggarwal

Rajat Aggarwal (Expert)

10 October 2016 in case of change in rate of tax POT is:
Where invoice is issue either before or within 14 days of completion of service then DAte of invoice is consider.
further between date of invoice and date of payment whichever is earlier is to be considered.
hence taking a consolidated view date of invoice is POT

Aditya Kumar Narayan

Aditya Kumar Narayan (Querist)

10 October 2016 Hi Sir,

If a reference to Rule 4 of POTR, 2011 is made, there is no mention of 14 days criteria. However, Rule 5 (service being taxed for the first time) has made a reference to 14 days criteria. In my above example, I believe that Rule 5 cannot be applied as an exemption is provided rather than a "new service being taxed for the first time". And as per Rule 4, since 14 days criteria is not specifically mentioned, the point of taxation can fall either on the invoice date or on the date of payment (depending on which sub-rule is followed).
If I consider date of payment, then the assessee can also enjoy the benefit of the exemption notification.