FAQ: Mr. X has provided Goods Transport Services to ABC Ltd. on 14-11-2015 and and raised the invoice on same day when the rate of service tax was 14% and ABC Ltd. had paid the service amount to Mr. X on 16-11-2015 when the rate of service tax was 14.5%. What is the point of taxation in this case?
Solution: Rules 7 of Point of Taxation Rules, 2011 - 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
Hence, as per Rule 7 of Point of Taxation Rules, 2011, in the above case Point is Taxation is the date of payment i.e. 16-11-2015. ABC Ltd. have to paid service tax @14.5% before 6th of the following month.
