Increased rate of Service Tax @ 14% is applicable from 1st June 2015 but one question is everyone’s mind that what is the point of taxation, Point of taxation involving change in effective rate of tax is governed by Rule 4 of the POT Rules, which provides for determination of Point of taxation when there is change in effective rate of tax as mentioned in the table below:

 

S. No. In case a taxable service has been provided Invoice has been issued Payment received for the invoice Point of taxation shall be Applicable Rate
1 BEFORE the change in effective rate of tax AFTER the change in effective rate of tax AFTER the change in effective rate of tax Date of issuance of invoice or Date of receipt of payment, whichever is earlier New Rate
2   BEFORE the change in effective rate of tax AFTER the change in effective rate of tax Date of issuance of invoice Old Rate
3   AFTER the change in effective rate of tax BEFORE the change in effective rate of tax Date of receipt of payment Old Rate
4 AFTER the change in effective rate of tax BEFORE the change in effective rate of tax AFTER the change in effective rate of tax Date of receipt of payment New Rate
5   BEFORE the change in effective rate of tax BEFORE the change in effective rate of tax Date of issuance of invoice or Date of receipt of payment, whichever is earlier Old Rate
6   AFTER the change in effective rate of tax BEFORE the change in effective rate of tax Date of issuance of invoice New Rate

 

 

Note: Before making any decisions do consult the experts. Author does not take any responsibility for misrepresentation or interpretation of act or rules. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on.

Also read related article: How to Pay Zero Tax for Income up to Rs 10 Lakhs by CA Chirag Chauhan

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Abhishek Ranjan Singh

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Managing Director and Founder, ARS Solutions



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