Point Of Taxation Rules 2011

          Point of Taxation means the point in time on which the service provided or agreed to be provided is deemed to be provided. It enables us to decide the rate of tax, value of taxable services, rate of exchange and due date of payment.

   As per Point of Taxation rules 2011 point of taxation is:

Case	Point Of Taxation
Invoice is issued within 30 days (or 45 days in case of specified financial institutions).	Date of Invoice        Or Date of Receipt payment Whichever is earlier
Invoice is not issued within 30 days (or 45 days in case of specified financial institutions).	Date of Completion of Service        Or Date of Receipt of payment Whichever is earlier

Note: In case of continuous supply of services where the services are provided continuously over the period exceeding three months and the provision of whole or part of service is determined by happening of an event after which the service receiver is required to pay the Service provider, the date of Completion shall be taken as the date of Happening of such event.

Point of taxation in the Case of Small advances:

                If a service provider receives an amount as advance not in excess Rs1000/= then such service provided has an option to take either the date of Invoice or date of completion whichever is earlier as point of taxation regardless of receipt of such advance.

Reason for the above relaxation: Accounting problems faced by the telecommunication and credit card service providers who receive small advances on daily basis.

For the purpose of determination of date of completion of a service completion of any auxiliary service to be provided shall also be considered.

                Example: If Mr. A provides a service which after completion needs to be measured or quality tested then such service provided by Mr. A shall be deemed to be completed only after such Measurement or Quality test.

Service tax in Case of First time taxability:

 If a service has been taxed for the first time and the invoice has been issued and payment received before the date of taxability then no service tax shall be charged to the extent of payment received.

Also if the payment has been received before the taxability of service and Invoice has been issued within 14 days after taxability, no tax shall be charged on such service to the extent of payment received before such service became taxable.

 Fig. 1

Point of taxation in case of reverse charge mechanism:

In reverse charge mechanism where the receiver of the services is required to pay tax, point of taxation will be:

If the payment is made within six months of completion of services.	Date of payment will be point of taxation.
If the payment is not made within six months of completion of services.	General Rule 3 will apply.

It the service provider is located outside India and the tax has to be paid by service receiver then point of taxation will be:

                Date of debit in the books of the receiver.

                                                Or

                Date of receipt of payment whichever is earlier.

Rule 8A:

Where complete details pertaining to date of invoice/date of completion of service/date of receipt of payment are not available the Chief Excise Officer can demand production of accounts or other proofs and after giving the chance of hearing to assessee and considering the rates of taxes on different periods of time determine the point of taxation to the best of his judgement.

“Study with Commitment and keep your target in your mind, stay away from the negative impulses, practice everything you have learned” Surely YOU ARE BORN TO SUCCEED............