PERIOD FOR ISSUANCE OF INVOICE EXTENDED FROM 14 days TO 30 DAYS
2.1 Before amendment: Rule 4A of Service Tax Rules, 1994 deals with issuance of invoice by provider of taxable service. The said rule provides that invoice should be issued within 14 days from the date of completion of service.
Now, this period of 14 days given in rule 4A has been extended to 30 days for all assessee and to 45 days for banks or any other person providing ‘Banking or other Financial Services’. Rule 3 of Point of Taxation Rules, 2011 has also been amended to provide that point of taxation shall be the date of issue of invoice if invoice is issued within the period specified in rule 4A of Service tax Rules, 1994.
By CA. Vikas Khandelwal,
2.1 Before amendment: Rule 4A of Service Tax Rules, 1994 deals with issuance of invoice by provider of taxable service. The said rule provides that invoice should be issued within 14 days from the date of completion of service.
Similarly, as per rule 3 of Point of Taxation Rules, 2011, date of invoice shall be the ‘point of taxation’, if invoice is issued within 14 days. There was demand to increase the said period as 14 days time is very short to issue invoice after completion of services.
Now, this period of 14 days given in rule 4A has been extended to 30 days for all assessee and to 45 days for banks or any other person providing ‘Banking or other Financial Services’. Rule 3 of Point of Taxation Rules, 2011 has also been amended to provide that point of taxation shall be the date of issue of invoice if invoice is issued within the period specified in rule 4A of Service tax Rules, 1994.
2.2 After amendment, the point of taxation FOR “PROVISION OF ANY TAXABLE SERVICE” AND FOR “CONTINUOUS SUPPLY OF SERVICE” shall be determined as under (SUMMARY OF RULE 3 OF POINT OF TAXATION RULES, 2011):
Case-I: Invoice is issued within 30 days (45 days in case of provider of ‘banking and other financial services) from the date of
completion of the provision of
service;
“The point of taxation shall be date of Invoice for the service provided or to be provided.”
However, if payment is received prior to date of issue of invoice, then the date of receipt of payment shall be point of taxation for the amount of payment to the extent received.
In other words, the point of taxation, in this case, shall be earlier of the following two dates:
(i) Date of Invoice for the service provided or to be provided ; or
(ii) Date of payment (including advance payment, if any) to the extent it is received prior to issue of invoice.
Case-II: Invoice is NOT issued within 30 days (45 days in case of provider of ‘banking 
and other financial services) from the date of completion of the provision of service;
and other financial services) from the date of completion of the provision of service; “The point of taxation shall be date of completion of the provision of the service.”
However, if payment is received prior to date of completion of provision of service, then the date of receipt of payment shall be point of taxation for the amount of payment to the extent received.
In other words, the point of taxation, in this case, shall be earlier of the following two dates:
(i) Date of completion of the provision of the service or
(ii) Date of Payment
(including advance payment, if any) to the extent it is received prior to date of completion of the provision of the service.
Date of completion of the provision of service in case of “continuous supply of service”
According to proviso to clauses (a) & (b) of Rule 6 of Point of Taxation Rules, 2011, where the provision of the whole or part of the service is determined periodically on the completion of an event in terms of a contract, which requires the service receiver to make any payment to service provider, the date of completion of each such event as specified in the contract shall be deemed to be date of completion of provision of service.
2.3 Illustrations: For better understanding and illustrations, readers may refer our article “an easy to understand analysis of point of taxation #1” already sent by mail and can be downloaded from our web site: www.vkcca.com. Since only period of 14 days has been increased, entire article is still relevant.
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Website: www.vkcca.com Ph: 011- 27356481,
Website: www.vkcca.com Ph: 011- 27356481,