Rules 7. Determination of point of taxation in case of specified services or persons.—
Notwithstanding anything contained in these rules, the point of taxation in respect of the persons required to pay tax as recipients of service under the rules made in this regard in respect of services notified under sub-section (2) of section 68 of the Act, shall be the date on which payment is made:
Provided that, where the payment is not made within a period of six months of the date of invoice, the point of taxation shall be determined as if this rule does not exist:
Provided further that in case of “associated enterprises”, where the person providing the service is located outside India, the point of taxation shall be the date of debit in the books of account of the person receiving the service or date of making the payment whichever is earlier.‟
Date of payment By service Recipient is Point of taxation (general rule): As per rule 7 of the point of Taxation Rules 2011(amended ) In case where the service recipient is liable to pay tax , the point of taxation shall be the date of payment against such services.
- If the invoice is issued with in the period specified in rule 4A of service tax rules ,1994(30days wef 01.04.2012 earlier 14 days) from the date of completion of service : Date of issue of invoice or receipt of payment ,which ever is earlier.
- If invoice is not issued with in prescribed time: Date of completion of service or receipt of payment (payment date).
Example: Suppose a Service has been provided by Ram(SP) to Sham Ltd(SR) and date of completion of service is 31.07.2012.
Determine point of taxation if
- Payment is made in advance on 15.07.2012(Advance)
- Payment is made on 15.01.2013(with in 6 months)
- Payment is made on 15.03.2013(after 6 months)
- Bill is raised on 15.08.2012 (with in 30days as prescribed rule 4A)
- Bill is raised on 15.09.2012( After 30 days as prescribed in rule 4A)
Ans: Point of taxation in above case will be as under.
- 15.07.2012(date of advance payment)
- 15.01.2013(date of Payment)
- Rule 7 first proviso read with rule 3
- 15.08.2012 (date of Invoice)
- 31.07.2012(date of completion of service)
Read Details about all services Falls under Reverse Charge Mechanism From 01.07.2012.