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CA Sandesh Mundra

Consult Us For Construction

Amendment in Point of Taxation

Posted by on in Service Tax
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[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUBSECTION

(i)]

Government of India

Ministry of Finance

Department of Revenue

New Delhi, 31

st

March, 2011

Notification No.25/2011 – Service Tax

G.S.R. (E).- In exercise of the powers conferred by clause (a) and clause (hhh) of subsection

(2) of section 94 of the Finance Act, 1994 (32 of 1994) the Central Government hereby makes

the following rules further to amend the Point of Taxation Rules, 2011, namely:-

1. (1) These rules may be called the Point of Taxation (Amendment) Rules, 2011.

(2) They shall come into force on the 1

st

day of April, 2011.

2. In the Point of Taxation Rules, 2011 (hereinafter referred to as the “said rules”), for rule 3, the

following rule shall be substituted, namely:-

3. Determination of point of taxation.-

For the purposes of these rules, unless otherwise

provided, ‘point of taxation’ shall be,-

(a) the time when the invoice for the service provided or to be provided is issued:

Provided that where the invoice is not issued within fourteen days of the completion

of the provision of the service, the point of taxation shall be date of such completion.

(b) in a case, where the person providing the service, receives a payment before the time

specified in clause (a), the time, when he receives such payment, to the extent of such

payment.

Explanation .

 

Explanation

shall be inserted, namely:-

Explanation

.- For the purposes of this rule, “change in effective rate of tax” shall include a

change in the portion of value on which tax is payable in terms of a notification issued under

the provisions of Finance Act, 1994 or rules made thereunder.”.

4. For rule 6 of the said rules, the following rule shall be substituted, namely:-

6. Determination of point of taxation in case of continuous supply of

service

.-

Notwithstanding anything contained in rules 3,4 or 8, in case of continuous supply

of service, the `point of taxation’ shall be,-

(a) the time when the invoice for the service provided or to be provided is issued:

Provided that where the invoice is not issued within fourteen days of the completion

of the provision of the service, the point of taxation shall be date of such completion.

(b) in a case, where the person providing the service, receives a payment before the time

specified in clause (a), the time, when he receives such payment, to the extent of such

payment.

 

Explanation 1.

 

31/03/2011 Notification No.25/2011 – Service Tax,…

servicetax.gov.in/…/st25-2k11.htm 1/2

of provision of service.

Explanation 2.

 

7. Determination of point of taxation in case of specified services or

persons.-

Notwithstanding anything contained in these rules, the point of taxation in respect

of,-

(a) the services covered by sub-rule (1) of rule 3 of Export of Services Rules, 2005;

(b) the persons required to pay tax as recipients under the rules made in this regard in

respect of services notified under sub-section (2) of section 68 of the Finance Act, 1994;

(c) individuals or proprietary firms or partnership firms providing taxable services referred

to in sub-clauses (p), (q), (s), (t), (u), (za), (zzzzm) of clause (105) of section 65 of the

Finance Act, 1994,

shall be the date on which payment is received or made, as the case may be:

Provided that in case of services referred to in clause (a), where payment is not

received within the period specified by the Reserve Bank of India, the point of taxation shall

be determined, as if this rule does not exist.

Provided further that in case of services referred to in clause (b) where the payment

is not made within a period of six months of the date of invoice, the point of taxation shall be

determined as if this rule does not exist.

Provided also that in case of “associated enterprises”, where the person

providing the service is located outside India, the point of taxation shall be the date of credit

in the books of account of the person receiving the service or date of making the payment

whichever is earlier.

6. For rule 9, the following rule shall be substituted, namely:-

 

9. Transitional Provisions

.- Nothing contained in this sub-rule shall be applicable,-

(i)

where the provision of service is completed; or

(ii)

where invoices are issued

prior to the date on which these rules come into force.

Provided that services for which provision is completed on or before 30

th

day

of June, 2011 or where the invoices are issued upto the 30

th

day of June, 2011, the point of

taxation shall, at the option of the taxpayer, be the date on which the payment is received or

made as the case may be.”.

[ F.No. 334/3/2011 – TRU]

(SAMAR NANDA)

Under Secretary to the Government of India

Note.- The principal notification No. 18/2011-Service Tax, dated the 1

st

March 2011,

published in the Gazette of India, Extraordinary, vide number G.S.R.175(E), dated the 1

st

March, 2011.

31/03/2011 Notification No.25/2011 – Service Tax,…

servicetax.gov.in/…/st25-2k11.htm 2/2

- For the purpose of this rule, wherever any advance, by whatever name known,

is received by the service provider towards the provision of taxable service, the point of

taxation shall be the date of receipt of each such advance.”.

5. For rule 7, the following rule shall be substituted, namely:-

– For the purpose of this rule, where the provision of the whole or part of the

service is determined periodically on the completion of an event in terms of a contract, which

requires the service receiver to make any payment to service provider, the date of completion

of each such event as specified in the contract shall be deemed to be the date of completion

- For the purpose of this rule, wherever any advance by whatever name known,

is received by the service provider towards the provision of taxable service, the point of

taxation shall be the date of receipt of each such advance.”.

3. In rule 4 of the said rules,-

(i) for the words “change of rate”, wherever they occur, the words “change in effective rate of

tax” shall be substituted;

(ii) for the words “change of rate of tax” or “change in tax rate” or “change of tax rate”,

respectively at both the places where they occur, the words “change in effective rate of tax”

shall be substituted;

(iii) after sub-clause (iii) of clause (b), the following

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CA Sandesh Mundra, Consultant – Management Audit and Indirect Taxation - Chartered Accountant, Diploma in Information System Audit, Diploma in Insurance & Risk Management , Certificate from ICAI on International Financial Reporting Standards. Actively associated with clients in the industrial construction sector since last 9 years.He possesses special skills in structuring the indirect tax component of the works contracts and as management auditor, has visited several construction sites in various states like Orissa, Rajasthan, Gujarat, Maharasthra, Madhya Pradesh etc. During the course of said visits he has been to very large industrial complexes, refineries, power plants etc

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