Service tax-reverse charge pot

As per proviso to Rule 2A of Point of Taxation Rules, 2011  Date of Payment shall be the date of credit in the bank account if the following cummulative conditions are satified :

• There is change in effective rate of tax or when a service is taxed for the first time during the period between such entry in books of accounts and its credit in the bank account.
• The credit in the bank account is after four working days from the date when there is change in effective rate of tax or a service is taxed for the first time;
• The payment is made by way of an instrument which is credited to a bank account.

Concl. (1) As per the above provision in your case date of payment will be the date of credit in bank account if payment is credited after 4 working days & other conditions are satisfied.

Applicability of Service Tax Rate

Provision of Rule 4 of Point of Taxation Rules, 2011 are as follows :

You have not specified when the service was provided so based on the above provision of Rule - 4 you can determine the point of taxation considering date of payment to be 15th June ( As per proviso to Rule 2A).

Now comes Rule 7 of Point of Taxation Rules, 2011 which deals with point of taxation in case of reverse charge which is as follows :

Point of taxation in respect of reverse charge will be the payment date or the first day that occurs immediately after a period of three months from the date of invoice, whichever is earlier.

Final conclusion :

Based on the above provisions of Point of Taxation Rules, 2011, New rate of service tax i.e. 14% would be applicable subject to

the fact that amount is credited after 4 working days in the bank account.

If you have any more questions w.r.t. this answer or required more clarification do revert back with your reply

Does date of credit in bank account means -> Service provider's/Service recievers.

If it means service providers.

What can a service reciever do in case of reverse charge, if service provider sent for collection after 4 days from change in effective rate of tax.

What is purpose this 4 days?

Plz reply.

It refers to date of credit in the bank a/c of service provider because since service receiver would be making payment so it would be credited in the service providers bank account.

For Reverse Charge, point of taxation would be as per Rule 7 i.e. Point of taxation in respect of reverse charge will be the date on which payment is made or the first day that occurs immediately after a period of three months from the date of invoice, whichever is earlier.

So under reverse charge there is no application of Rule 2A.

As far as the condition of 4 days is considered in Rule 2A, the logic as per my understanding would be that under normal circumstances it takes around 3-4 days for a bank instrument clearing.

Hope you are still not confused.