Suppose new service become taxable for the first time,  or a new levy on services(KKC) . (New Amendment)

then no tax is payable if

  • Both Invoice issued and payment received before service becoming taxable
  • Payment received before service becoming taxable but invoice issued within 14 days of service becoming taxable

 

Analysis

No tax is payable

if payment received in advance before sevice becoming taxable

and

invoice issued for the same (either before service becoming taxable or within 14 days of becoming taxable)

 

If invoice issed after 14 days, of service becoming taxable, then tax will be charged

 

 

Meaning of Date of Payment

 Date of Payment means

Date Payment entered in books

Or

Date of Credit in bank account

Whichever is earlier

 

Exception-

But In case of new service becoming taxable or change in rate of tax,

Date of Payment means

Date of Credit in bank account only

If following condition is satisfied

  • Such rate change or new service becoming taxable is between date of credit and date of payment
  • the payment is made by way of an instrument which is credited to a bank account, (Example-Cheque)
  • the credit in the bank account is after four working days from the date when there is change in effective rate of tax or a service is taxed for the first time;
  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 8 years. He provides GST Training in Delhi. Register now.