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St payment & potr

Hiren Parmar (ARTICLE) (77 Points)

26 August 2016

Dear Experts, When a service provider follows cash system for payment of service tax he pays on receipt basis but POT says liablity arises @ invoice issue or receipt of payment whichever is earlier so in case invoice is issued before receipt of payment then POTR is violated

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9 Replies

CMA Poornima Madhava (CMA) (13107 Points)
Replied 26 August 2016

As I understand, option to pay ST on receipt basis is available (for Individuals/Firms) if the turnover is <=50 lacs. If not covered under this category, then POT is date of invoice or receipt whichever earlier (if invoice raised within 30 days). Else, POT is date of completion of service of receipt, whichever earlier. Have I missed anything here?

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Hiren Parmar (ARTICLE) (77 Points)
Replied 26 August 2016

u sae date of invoice or receipt of payment whichever is earlier

or completion of service or invoice receipt whichever is earlier

now lets say invoice date is 4th April 2016 and payment is received on 31st December 2016

Service completed on 31st March 2016

Now Here POT is 4th April Right

But as i am on cash basis i will pay service tax only after 31st December 2016 as that is receipt date

that means my st payment date is not equal to POT date

Hiren Parmar (ARTICLE) (77 Points)
Replied 27 August 2016

Plz anyone reply i am getting confused

CMA Poornima Madhava (CMA) (13107 Points)
Replied 29 August 2016

If the option to pay ST on receipt basis is availed, then POT would the date of receipt (irrespective of rule 3 of POTR)

Sunil Kumar (Indirect Taxation ) (1246 Points)
Replied 29 August 2016

Hi Hiren Parmar,

Don't be get confused. We are here to help you.

Let me take your query in bit technical terms.

The essence Point of taxation rules is to determine the leviability date and not the payment date. Therfore, once you decide what is the point of taxation then, you need to go to service tax rules wherein third proviso to rule 6(1) gives the option to pay tax on reciept basis.

Therefore, if you are eligible for that option and opt for the same then your laibility get deferred to the date of actual reciept.

On following the STR 1994 point of taxation rule doesn't get violated

Hope you got a nice solution to your query.