Point of Taxation Rules 2011

As per Rule 6(1) of Service Tax Rules 1994 Service tax is paid to the credit of the central government by 5th or 6th as the case maybe immediately following the calendar month (5th or 6th as the case maybe immediately following the quarter in case of partnership,individual and proprietary firm)  in which the service deemed to provided as per rules framed in this regard.

The time limit for the payment of Service Tax as follows

1.by the 6th day of  immediately following calendar month if the duty is deposited by electronically through internet banking and

2.by the 5th day of  immediately following calendar month in any other case.

The Central Government made the point of Taxation rules 2011 for the purpose of collection of service tax, determination of rate of service tax and the point in time when a service shall be deemed to have been provided.

Hence the service tax is to be paid to the credit of the central government by 5th or 6th  immediately following the calendar month in which shall be deemed to have been provided as per the point of taxation rules 2011.

The point of Taxation in general is the earlier of 

• The date of Issue of invoice, or
• Date of Amount received.

If the Invoice is not issued within 30 days (45 days in case of banking and other financial service providers) for the Services provided or agreed to be provided then the Point of Taxation is date of completion of services.

For ease reference see the following chart from caman

Rule 3 of Point of Taxation Rules 2011

Point of Taxation in case of Reverse Charge 

The point of taxation in respect of the persons required to pay tax as recipients of service under the rules made in this regard in respect of services notified under sub-section (2) of section 68 of the Act.

where service receiver is liable to pay service tax as per reverse charge than the point of taxation is the date on which the payment is made to service provider ;

If the Payment is not paid  within a period of six months from the date of invoice then the point of Taxation is determined as per rule 3.

Point of Taxation for Associated Enterprises 

The Associated enterprises has been defined   92A of Income Tax 1961, when any company in India receives any services provided by Associate enterprise who is located out side India then the service tax on those transactions is paid on

• Date of debit in the Books of Accounts; or
• Date of making the payment, which ever is earlier.

The Point of Taxation in case of change in rate of tax

The point of taxation in cases where there is a change in effective rate of tax in respect of a service, shall be determined in the following manner, namely

(a).In case a taxable service has been provided before the change in effective rate of tax then

• where the invoice has been issued and the payment received after the change in effective rate of tax, the point of taxation shall be date of payment or issuing of invoice, whichever is earlier; or
• where the invoice has been issued prior to change in effective rate of tax but the payment is received after the change in effective rate of tax, the point of taxation shall be the date of issuing of invoice; or
• where the payment is also received before the change in effective rate of tax, but the invoice for the same has been issued after the change in effective rate of tax, the point of taxation shall be the date of payment;

(b).In case a taxable service has been provided after the change in effective rate of tax

• where the payment for the invoice is also made after the change in effective rate of tax but the invoice has been issued prior to the change in effective rate of tax, the point of taxation shall be the date of payment; or
• where the invoice has been issued and the payment for the invoice received before the change in effective rate of tax, the point of taxation shall be the date of receipt of payment or date of issuance of invoice, whichever is earlier; or
• where the invoice has also been raised after the change in effective rate of tax but the payment has been received before the change in effective rate of tax, the point of taxation shall be date of issuing of invoice.

For ease reference see the following chart from caman

Point of Taxation as per Rule 5

Payment of tax in case of new services

Payment of tax if Any service has been added to an existing taxable services, or Any service which is exempted has been Taxed for the first time, or Any tax has been levied for the first time on the services, is determined as follows 

• No tax shall be payable to the extent the invoice has been issued and the payment received against such invoice before such service became taxable;
• No tax shall be payable if the payment has been received before the service becomes taxable and invoice has been issued within fourteen days of the date when the service is taxed for the first time.

Point of Taxation in case of Copyrights, Trademarks, Royalties, Designs and Patents

Point of taxation in case of specific services of Copyrights , Trademarks , Royalties , Designs or Patents, where the whole amount of the consideration for the provision of service is not ascertainable at the time when service was performed, and subsequently the use or the benefit of these services by a person other than the provider gives rise to any payment of consideration, the service shall be treated as having been provided.

Each time when a payment in respect of such use or the benefit is received by the provider in respect thereof, or an invoice is issued by the provider, whichever is earlier.

The point of taxation as per Rule 8 is 

• Date of Receipt of amount; or
• Date of issue of invoice (if any has been issued) which ever is earlier.