Up to 31.03.2012, if the following 8 services provided by individuals or proprietary firms or partnership firms then these services shall be deemed to have been provided on the date on which payment is received:
1. Consulting Engineer’s Services [Section 65(105)(g)]
2. Architect’s Services[section 65(105)(p)]
3. Interior Decorator’s Services [Section 65(105)(q)
4. Practicing Chartered Accountant’s Services[Section 65(105)(s)]
5. Practicing Cost Accountant’s Services[Section 65(105)(t)
6. Practicing Company Secretary’s Services[Section 65(105)(u)]
7. Scientific or Technical Consultancy Services [Section 65(105)(za)
8. Legal Consultancy Services [Section 65(105)(zzzzm)]
From 01.04.2012 With the Amendment in Point of Taxation Rules, 2011 vide Notification No. 4/2012 – Service Tax dated 17.03.2012 individuals and firms providing eight specified services who were eligible to pay service tax on receipt basis will now have to on the basis of Date of Bill or Date of Payment whichever is earlier if there Turnover exceeded 50 Lakh in Previous Financial Year. .
From the combined reading of Rule 5B of Service Tax Rules, 1994 and Rule 7 of Point of Taxation rules, 2011 we can say that in respect of above 8 services rate of service tax shall be taken of the date on which payment is received irrespective of date of issue of invoice or completion of services.
WEF 01.04.2012 rate of service tax has been increased from 10% to 12% now the question was that, in respect of invoice issued up to 31.03.2012, which rate of services tax to be taken and same has been clarified by department on the basis of above provisions.
Department has clarified that, in respect of invoices raised up to 31.03.2012 by individuals or proprietary firms or partnership firms providing above 8 specified services, rate of service tax shall be 12%.
It was further clarified that The invoices issued before 1st April 2012 may reflect the previous rate of tax (10% and cess). In case of need, supplementary invoices may be issued to reflect the new rate of tax (12% and cess) and recover the differential amount. In case of reverse charge the service receiver pays the tax and takes the credit on the basis of the tax payment challan. Cenvat credit can be availed on such supplementary invoices and tax payment challans.
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