Receipt or due basis

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 December 2011 I have raised a bill in the month of April 2011 on which service tax was charged. I have not the received the payment of the bill till date. Now since service tax payment is to be made on accrual basis from 01.07.2011. Whether I am liable to deposit the service tax on the same.

CS Bijoy

CS Bijoy (Expert)
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28 December 2011 Service tax department will not wait till you received the money so while bill raised amount should be deposited within prescribed periods.

Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2011 But Sir service tax has been made on accrual basis from 01.07.2011. And after raising my query I interpreted for Rule 9 of Point of Taxation Rule 2011 that service tax will be on paid when payment is received since bill is raised in April 2011. I would just like to know whether my interpretation is correct on the same.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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20 July 2025 Key points:
Before 01.07.2011: Service tax liability was on the date of invoice or payment, whichever was earlier (Point of Taxation Rules, 2004).
From 01.07.2011 onwards: Under the Point of Taxation Rules, 2011, service tax is generally payable on the earlier of:
The date of issue of invoice, or
The date of receipt of payment.
Your case:
You raised the bill in April 2011 (before 01.07.2011), charging service tax.
Payment not yet received.
What applies?
Since the invoice date is before 01.07.2011, old rules apply to this invoice, meaning:
Service tax is payable on invoice date or receipt of payment, whichever is earlier.
Since invoice was raised but payment not yet received, tax liability is triggered on invoice date (April 2011).
So you are liable to pay service tax on the invoice date even if payment is not yet received.
To sum up:
Period Tax Liability Trigger
Invoice raised before 01.07.2011 Date of invoice or payment, whichever earlier
Invoice raised on/after 01.07.2011 Date of invoice or payment, whichever earlier (but rules updated to give more clarity on time limits)
Your invoice was raised before 01.07.2011, so the old Point of Taxation Rules apply, and service tax is due from the invoice date, even if payment is pending.

Reference:
Point of Taxation Rules, 2004 (Rule 3): Tax on invoice date or payment receipt date whichever is earlier.
Point of Taxation Rules, 2011 apply only to invoices issued on or after 01.07.2011.

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