Definition of Continuous Supply of Service

It means

Continuous supply of service for 3 month or more with periodic payment

Or

Any service notified by Central Government as Continuous Supply of Service with or without condition

 

Point of Taxation In case of Continuous supply of service

In this case, service goes on continuously and there is no end date.

However, payment is made periodically on completion of event in contract (for example every month)

In this case, date of event shall be deemed to be date of completion of such service for the purpose of this rule

 

Example

Suppose Max Security Agency Pvt Ltd enters an agreement to provide Security guards to a Client A Ltd for 1 year starting from 1 June 2016 for 120000 p.a.

As per Contract,invoice is to be issued monthly for Rs 10000 per month on last day of each month.

Is it a Continuous supply of Service?

-a-

Yes,as

Service provided for more than 3 months

+

Periodic Payment

-ea-

What is date of completion of Service Provided for June?

-a-

It is the end of month i.e. 30 June

 -ea-

What is the last date of issuing an Invoice?

-a-

It is 30 days of completion of event i.e. 30 days from 30 June i.e. 30 July

-ea-

Suppose Bill actually issued on 25 July and payment received on 14 August,When is Service tax payable

-a-

Invoice is issued within 30 days of completion of event (30 June)

hence POT is

Date of invoice -25 July

or

Date of Payment-14 Aug

which ever is earlier i.e. 25 July

and to be deposited by

6th of next month i,e, 6 Aug

 

 

 

 

  1. Service Tax
  2. Point of Taxation Rules
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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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