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Point of Taxtation Rules,2011


Point of taxation Rules, 2011 introduced the change in payment method of service tax. Excepting certain specified cases, now service tax would be paid on accrual basis. Before it was payable on receipt of payment.

Point of Taxation- Point of taxation is the time of issuing of invoice for the provision of service or agreement of provision. It could be the date of completion of service or provision of service if invoice is not issued within prescribed time period which is of 30 days (45 days for financial sector). Also if payment is received before completion of service or issuance of invoice, then the date of receipt is considered to be the point of taxation. Hence tax would be applied on the agreements to provide services only on issuance of invoice or on receipt of payment or on date of completion of service.

Also this rule answered the question of actual date of payment which is earlier of date of entry in books of accounts or date of credit to bank.

The Point of taxation rules came into force from April 1, 2011.

Notification No: Service Tax Notification No 18/2011 (ST)
Date: 01-03-2011
File No:
Issuing Authority: Service Tax
Type: Notification
Subject: Central Government hereby makes the following rules for the purpose of collection of service tax and determination of rate of service tax, namely,-

Short title and commencement

  • These rules shall be called the Point of Taxation Rules, 2011.
  • They shall come into force on the 1st day of April, 2011.

Definitions

  • "Act"means the Finance Act, 1994 (32 of 1994).
  • " change in effective rate of tax" shall include a change in the portion of value on which tax is payable in terms of a notification issued in the Official Gazette under the provisions of the Act, or rules made thereunder.
  • "continuous supply of service" means any service which is provided, or where the Central Government, by a notification in the Official Gazette, prescribes provision of a particular service to be a continuous supply of service, whether or not subject to any condition;
  • "invoice"means the invoice referred to in rule 4A of the Service Tax Rules, 1994 and shall include any document as referred to in the said rule.
  • "point of taxation" means the point in time when a service shall be deemed to have been provided.

References

For further details please visit the sites:-

www.aces.gov.in
www.servicetax.gov.in
cbec-easiest.gov.in
www.taxguru.in