Point of taxation is determined on the basis of earlier of following events (Rule 3) :-

a)       The time when the invoice for the service provided or to be provided is issued OR

b)       Where the person providing the service, receives a payment

Provided that the invoice has been issued within 30 (45 in case of banking services) days from the completion of provision of Service.If invoice has not being issued with in stipulated time then POT shall be the date of completion of provision of Service.

For the purpose of more clarity a chart has been prepared with multiple combination

Date of completion of service Date of invoice Date on which amount received Point of taxation Remarks
01-05-2012 20-05-2012 25-05-2012 20-05-2012 Invoice issued with in time so POT will be date of invoice or date of amount received whichever is earlier.
01-05-2012 25-05-2012 18-05-2012 18-05-2012
 

01-05-2012

 

23-06-2012

 

10-05-2012

 

01-05-2012

Invoice issued after prescribed time so POT will be Date of completion of service or payment received whichever is earlier.
01-05-2012 15-05-2012 25-04-2012 25-04-2012 Date on which amount received is POT as it is earlier of other two events.

 Point of taxation in Reverse charge mechanism

Reverse charge  Mechanism- Under this concept service receiver is liable for payment of service tax to the account of the govt . Point of taxation in case of reverse charge is discussed below –

a)      In case advance payment is made to the service provider then date of advance payment is the Point of taxation.

b)      If payment is made with in six months from date of the invoice then date of payment will be considered as Point of taxation .

 c)       If payment is made after six months from the date of invoice then Point of taxation will be –

a)      Date of invoice provided that the invoice has been issued with in 30 days from completion of provision of service ;

b)      Date of completion of provision of service if invoice is not issued with in 30 days from completion of provision of service .

Below is a chart representing more clarity in this regards

Date of completion of service Date of invoice Date of making payment Point of taxation
10-05-2012 20-05-2012 25-04-2012 25-04-2012
10-05-2012 20-05-2012 10-08-2012 10-08-2012
10-05-2012 20-05-2012 10-04-2013 20-05-2012
10-05-2012 20-06-2012 10-04-2013 10-05-2012

Article by –

Anubhav Jain (CA Final),

Kota (Rajasthan),

Email- anubhav5jain@gmail.com

Click here to Read Other Articles of Anubhav Jain 

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24 responses to “Service Tax – Point of taxation rules (POT)- At a glance”

  1. CA Rajendra G. Zawar says:

    WhatF will be POT in case of a CA having receipts less than 50 lacs. Issued invoice in Jan.17. payment not received till date.

  2. CA Rajendra G. Zawar says:

    What will be POT to a CA having T. O. Less than 50 lacs.
    Issued invoice in jan.17 payment not received til date.

  3. Nishant Verma says:

    For c part (in case of reverse charge), period has been reduced to 3 months. Further if payment is not made within 3 months of invoice, the date immediately next to the end of 3 months will be considered as point of taxation.

  4. hardik baid says:

    what will be point of taxation if invoice is issued before completion of service ?

  5. Ankit Lohia says:

    a client, has provided the services in the month of march,2015 along with the invoice but payment received in the month of October then please help me to know whether the client has required to deposit the service tax in the month of April or can made afterwards.

  6. Ulhas says:

    Hi Anubhav

    Point of Taxation is changed for point no (d) As per Notification 13/2014 limit reduced up to three month please inform

    b) If payment is made with in six months from date of the invoice then date of payment will be considered as Point of taxation .

  7. Harsh gupta says:

    1)display service from 05-05-2015 to 04-06-15.
    2)service tax rate change from 12.36% to 14% from 1-june-15.
    3)when would we assume the service to have been provided? 5-05-15 or 4-06-15 or some other date.?

  8. santosh Kumar says:

    what will be the point of taxation for the amount of retention money received in April 2013, however the service has been completed in May 2011, before Point of Taxation Rules, 2011

  9. UMA DUTTA SHARMA says:

    Date of provision of service 30.04.2015
    date of invoice 30.06.2015
    Date of payment 15.07.2015

    Invoice raised after 45 days of provision of service. Rate of service tax changed from 12.36% to 14% on 01.06.2015. Please confirm at what rate shall service tax be charged.

  10. UMA DUTTA SHARMA says:

    Date of provision of service 30.04.2015
    date of invoice 30.06.2015
    Date of payment 15.07.2015

    Invoice raised after 45 days of provision of service. Rate of service tax changed from 12.36% to 14%. Please confirm at what rate shall service tax be charged.

    • Deepak lakhi says:

      As per point of taxation rules, Pot for your service is 30th of April.
      But according to rules regarding change in rates the new rates shall apply in your case. i.e. 14%.

  11. Rizwan says:

    In case if the Invoice is raised before completion of service.
    For eg.
    a. Service Provided – 03-05-2011,
    b. Invoice Raised – 28-04-2011,
    c. Payment Received – 05-05-2011.

    What is the point of taxation.

  12. Dinesh Kumar says:

    pls say me in a individual firm date of service tax liability for example date of invoice or date of receiving the payment

  13. Dhaval says:

    In case of Service tax point of Taxation amendments, Service Receiver is eligible to take input credit on the booking of service invoice received or on the basis of payment made ??

    For eg. on 25 Feb 2015 service receiver has got the service invoice from service provider and on 15th March 2015 service receiver has made the payment towards same. in this scenario Service Receiver can eligible to take service tax input credit on 25th Feb 2015 or on 15th March 2015 ???

  14. NISHANT KAKKAR says:

    dear sir pls guide me in the following issues.

    as on 18/01/2015 Service tax department determined demand as we have not submitted/ deposited service tax. on the matter we deposited the service tax as we received payment from client. but now the demand raised by department is on the basis of 26-As thus pls guide me how to calculate actual service tax payable in F/Y-2009-10, 2010-11, 2011-12 and 2013-14.

    i means to say that whether service tax due on receipts basic or acrual basis.

    i have associated with manpower recruitment agency as Security services.

    pls reply soon as im waitting for your response

    Thanking you.

    Nishant kakkar
    M-98710-34071
    Add-489, Turab nagar Ghaziabad-201001 UP

  15. anzud says:

    hello
    would u like to refer 2nd table ,how pot become 10 august

  16. Anubhav Jain says:

    P.k. verma
    Kindly go through the same ex once again and try to link the example with description given above
    Ty

  17. P.k.verma (ipcc Second group) says:

    if u want so sir u can reply me on pdmkmrverma88@gmail.com

  18. P.k.verma (ipcc Second group) says:

    Dr bro
    of of my quary is that your iiird example of reverse charges is something ungetteable so kindely requested to you please explain this because you wrote that in reverse charges , if in case of advance payment, we will assume pot=DOP DATE OF PAYMENT
    but iiird example is not saying this

  19. P.k.verma (ipcc Second group) says:

    hello .
    can you tell me about reverse charges another examples.

  20. anubhav jain says:

    @pradeep
    kindly make it more clear.

    @sanjeev
    In case of RCM, POT will be on receipt basis if payment is made within 6 month so no issue in that.

  21. sanjeev says:

    in table 2nd how can be pot 10 aug 2012 since invoice has been issued withn 30days of service received and payment has been made on 12th aug , since 20th may is earlier pot should be 20th

  22. Ruby Gupta says:

    I want to know the place of taxation of service tax: my query is if an indian company has a warehouse in other country and our coumpany is paying rent to that warehouse owner ( who is may be any person)..whether indian comapny is liable to pay service tax as per reverse service mechanism?

  23. Pradeep says:

    I would like to know the service tax percentage charged on at the time of all of that work.

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