Reverse charge

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Querist : Anonymous

Querist : Anonymous (Querist)

22 July 2015 What is the rule to follow in case change in effective rate in reverse charge ?
Say service of manpower is provided on may,15--- invoice issued on 1/6/2015___payment made on 22/6/2015

Querist : Anonymous

Querist : Anonymous (Querist)

22 July 2015 Plz help me

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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22 July 2025 Good question! When there’s a change in service tax rate under reverse charge between the date of service, invoice, and payment, here’s how to determine the applicable rate:

Key Dates and Rate Applicability:
Date of Provision of Service (May 2015): When the service was actually provided.

Date of Invoice (1 June 2015): When the bill was issued.

Date of Payment (22 June 2015): When you made the payment.

Rule to Follow:
Service tax is generally payable at the rate effective on the date of payment or the date of invoice, whichever is earlier.

If the service tax rate changed after May 2015 but before June 2015, then the rate applicable on 1 June 2015 (invoice date) applies.

If the payment is made after the rate change, still the rate on the earlier of invoice or payment date applies.

If no invoice is issued, then the rate on date of payment applies.

In your case:
Service provided: May 2015 (old rate)

Invoice date: 1 June 2015 (new rate effective?)

Payment date: 22 June 2015 (new rate effective?)

Assuming rate changed between May and June:

Apply rate effective on 1 June 2015 (invoice date).

Since invoice date is before payment date, invoice date rate governs.

Reference:
As per CBEC Circulars and Service Tax Rules, the date of invoice or payment, whichever is earlier, determines the rate of service tax for payment.

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