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Discussion on idt - st - pl join

Madhavi (CA - FINAL) (1342 Points)

27 March 2013

pl join in the discussions of st

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10 Replies

Madhavi (CA - FINAL) (1342 Points)
Replied 27 March 2013

Let us discuss POT rules, 2011 first

Deep@k (----) (155 Points)
Replied 27 March 2013

hey..can we discuss it tommorow...

PSPSPS (Practicing) (1344 Points)
Replied 27 March 2013

What is POT ?

Madhavi (CA - FINAL) (1342 Points)
Replied 27 March 2013

POT means the point in time when a service shall be deemed to have been provided

Aravind.. (CA) (1262 Points)
Replied 28 March 2013

Hey, pls solve this yaar... I ve asking this for the past two months... wat is the implication of sec.67A on POT rules... Lets pls clarify this...

CA Mahavir Shah (Practicing Chartered Accountant) (1130 Points)
Replied 28 March 2013

¨ Section 67A of Finance Act, 1994 has become effective from 28-5-2012.

¨ As per section 67A, the rate of service tax, value of a taxable service and rate of exchange, in force or as applicable at the time when the taxable service has been provided or agreed to be provided is relevant

¨ Service tax rate as applicable at the time when taxable service has been provided or agreed to be provided.

¨ Point of Taxation Rules relevant only to determine due date of payment of service tax and not rate of service tax, w.e.f. 28-5-2012.

¨ Rate of customs duty is relevant for valuation in case of export and import of services. In such cases, rate of exchange as notified in Customs Notification is relevant and not RBI reference rate of rates notified by FEDAI or rate at which the amount is credited or debited by the Bank to account of service provider/service receiver.

Aravind.. (CA) (1262 Points)
Replied 28 March 2013

ya... thats okay sir... could you please explain how 67A could affect rule 4 and 5 sir..

CA Mahavir Shah (Practicing Chartered Accountant) (1130 Points)
Replied 28 March 2013

No service tax on new services, if service provided prior to 1-7-2012

¨ Many services have become taxable w.e.f. 1-7-2012, which were not taxable earlier.

¨ In view of section 67A (which is effective from 28-5-2012), service tax will not be payable if service was provided prior to 1-7-2012, even if payment is received later.

¨ This will be so even if invoice was issued after 1st July 2012. However, to avoid controversy and headaches, it is advisable to date invoice prior to 30-6-2012.

Advance received prior to 1-7-2012

¨ Many services have become taxable w.e.f. 1-7-2012 which were not taxable earlier.

¨ Service tax is leviable on service provided or agreed to be provided [section 66B]. There cannot be two events for same taxable service. Hence, logically, the event which occurs first will determine tax rate i.e. receipt of advance or provision of service, whichever occurs first will determine rate and value of service tax [section 67A]

¨ If advance received prior to 1-7-2012 when service was not taxable, no tax even if service provided after 1-7-2012.

¨ This is also provided in Rule 5(b) of Point of Taxation Rules which provides that if advance was received prior to 30-6-2012, service tax will not be payable if invoice issued within 14 days [Relief in case of services newly taxable]

¨ To avoid misuse, it has been provided that if assessee claims receipt of advance, the amount must be credited in his bank account within 4 days i.e. maximum before 4-7-2012 [In any case, now validity of cheque is only for 3 months]