Recognition of income by the service provider is not relevant for determinig the piont of taxation under the amended Point of Taxation Rules. Rule 3 on determination of point of taxation has been amended vide Notification 25/2011-ST dated 31.03.2011, and the same is produced below:
"3. Determination of point of taxation.- For the purposes of these rules, unless otherwise provided, ‘point of taxation’ shall be,-
the time when the invoice for the service provided or to be provided is issued:
Provided that where the invoice is not issued within fourteen days of the completion of the provision of the service, the point of taxation shall be date of such completion”.
Hence, Completion of the provision of the service becomes an important factor in determining point of taxation. I think as a Thrid Party Administrator, provision of service should be treated as completed when the claim is processed and payment is made by you to policy holder. As this is the event which makes the insurer liable to pay the amount to the TPA. As far as the delay of 3-4 months is concerned, that has to be borne by TPA only.