Introduction
The Point of taxation rules were introduced in 2011
and since then, the govt. has made numerous amendments to it.
Recent Changes
1. In case of
individuals and firms, where the taxable services provided in a year do not
exceed Rs. 50 lakhs, they have the option to pay service tax on receipt basis.
2. In-case
service provider receives up to Rs. 1000 in excess of the invoice amount; there
is no need to raise fresh invoice for such excess amount if POT rules are
followed.
3.
Exporter of
service is not required to pay tax if payment is received within the period
specified by RBI.
4. Date of
payment has been specifically defined under Rule 2A
·
In normal
case - Prior to entry into books of accounts or actual credit
·
In case of
change of rate or new levy between the said two dates - Date when the amount is
actually credited in the bank, if it is credited more than 4 days after date of
such change.
5.
Continuous
supply of services
a)
Continuous
services:
·
Telecommunication
Services
·
Commercial
or Industrial construction
·
Construction
of residential complex
·
Internet
telecommunication and works contract
·
Any other
services if provided continuously or on recurrent basis under a contract for a
period exceeding three months
b)
Point of
taxation for above shall be as follows:
·
Date of
issue of invoice or receipt of payment, if the invoice is issued within the
prescribed period of 30 days from the date of completion of the provision of
service (earlier which was 14 days). In-case of service provider is banking
company or NBFC
·
Date of
completion of the provision of service or receipt of payment, if the invoice is
not issued within the prescribed time as above
c)
Separate
rules for continuous services have been omitted.
d)
Provision of
rules for new levy and changes of rates will also be applicable to continuous
supply.
6.
The
following are the specified services where in Point of taxation is on receipt
basis:
·
Architect
·
Interior
Decorator
·
Chartered
Accountants
·
Company
secretary
·
Scientific
and technical consultancy
·
Legal
consultancy
However Credit is available to
the service recipient on receipt of invoice though no amount has been paid.
7.
And lastly
the small scale exemption has been amended recognizing that the first
clearances up to Rs. 10 Lakhs will be in terms of invoices and not mere payment
received.