Regarding point of taxation of service tax.

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Querist : Anonymous

Querist : Anonymous (Querist)

21 January 2012 sir,

I am taking commission against targeted sales.Actuall condition is that If I achive the target of sales at arount 12000 mt. up to dec.11, then i will get @ 200/- P.m.t in this sales tonnes. otherwise i will not get any commission.
and If i got the commission through bill has been raised on 12/01/2012 against that , so, is the liabel of service tax as per point of taxation procedure. or i have to pay interest on that or penality.
Actually this contact is continious from April.2011 , the whole sales is up to dec.11.
So, Please guide us.
Thanking you.

Arun Gulati

Arun Gulati (Expert)
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22 January 2012 please clarify when you got the payment. If got the payment in the month of December or before that your services is deemed to completed and in case of advance receipt,you were also liable to pay service tax on 5th of next month.

Querist : Anonymous

Querist : Anonymous (Querist)

23 January 2012 Sir,
Only bill has been raised by the party, no further payment has been received aginst this.

Querist : Anonymous

Querist : Anonymous (Querist)

27 January 2012 sir,
Only bill has raised by the party, no further payment has been received against this.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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20 July 2025 Got it! Here's a clear explanation about service tax liability under the Point of Taxation Rules for your commission situation:

Scenario Recap:
You earn commission based on achieving a sales target by Dec 2011.
The contract is continuous from April 2011.
You raised the commission invoice on 12-Jan-2012.
You have not yet received any payment against this invoice.
You want to know when the service tax liability arises and if you need to pay interest or penalty.
🔑 Key points from Service Tax Point of Taxation Rules, 2011:
Point of Taxation means the date on which service tax is due.
Under Rule 3, the point of taxation is the earliest of:
Date of issue of invoice, or
Date of receipt of payment, or
Due date of payment as per contract.
If invoice is issued within 30 days of completion of service, the date of completion of service is the point of taxation.
Applying these to your case:
You raised the invoice on 12-Jan-2012 — this is after the completion of the service period (April 2011 to Dec 2011).
If payment is not received yet, the invoice date (12-Jan-2012) is the point of taxation.
You must pay service tax on or before the 5th of the following month of the point of taxation (i.e., by 5th Feb 2012).
What if you delayed service tax payment?
If service tax is paid after due date (5th Feb 2012), then:
Interest is payable on the delayed amount from the due date to actual payment date.
Penalty may also be imposed if delay continues.
What about continuous contract?
For continuous services, the tax is generally payable on receipt of invoice or payment, whichever is earlier.
Since invoice is raised after completion, point of taxation is invoice date.

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