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CBEC relief to services sector
Giving some relief to the services sector, the Central Board of Excise and Custom (CBEC) has clarified that issuance of invoices will henceforth be subject to the service taker certifying ‘completion of services'.
The new rules for the services sector, known as the Point of Taxation Rules 2011, have been effective from July 1, 2011.
Responding to requests regarding clarification on ‘Completion of Service', the board said, “the Service Tax Rules 1994 require that invoice should be issued within a period of 14 days from the completion of taxable service. The invoice needs to indicate inter-alia the value of service so completed.”
The board further clarified that it is important to identify the service so completed. It would include not only the physical part of providing the service but also the completion of all other auxiliary activities that enable the service provider to be in a position to issue the invoice.
It has defined auxiliary activities as activities like measurement, quality testing etc which may be essential pre-requisites for identification of completion of service.
Tax experts compare this clarification with completion certificate for a building. They say, from the date of issuance of certificate by service taker that he has received the service and he is satisfied, the service provider needs to raise the invoice within 14 days.
“This clarification has removed the ambiguity from the circular which in a way offers some relief for the services sector,” said Mr Bipin Sapra, Partner, Ernst and Young.
Source : TheHindu Bussinessline, India, dated 19/07/2011