Point of taxation for reverse charge

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mahender (Querist)
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16 August 2013 1) what is the point of taxation in case of reverse charge, if the amount is not paid to Service Provider with 6 months from the date of invoice?

2) if payment is not made bill wise, what is the point of taxation in the above situation?

Ganeshbabu K

Ganeshbabu K (Expert)
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16 August 2013 1)Service tax is payable by service receiver when actual payment is made to service provider and not on receipt of Invoice from service provider.

2)However, if payment is not made to service provider within 6 months, service tax is anyway payable. Interest is also payable.

3)Rule 7 of POT Rules states that POT under reverse charge would be date of Payment provided payment is made within 6 months from the date of invoice otherwise POT would be date of invoice.

Thanks & regards
Ganesh babu k

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CA Suresh Jain

CA Suresh Jain (Expert)
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16 August 2013 RULE 7. Determination of point of taxation in case of specified services or persons.--
Notwithstanding anything contained in these rules, the point of taxation in respect of the persons required to pay tax as recipients of service under the rules made in this regard in respect of services notified under sub-section (2) of section 68 of the Act, shall be the date on which payment is made :

Provided that, where the payment is not made within a period of six months of the date of invoice, the point of taxation shall be determined as if this rule does not exist:

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

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