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.|
|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|
Article by –
Anubhav Jain (CA Final),