Point of taxation is
Invoice issued for Service Provided
Or
Amount received
Whichever is earlier
Hence Service tax is applicable on Invoice Issued or Advance received whichever is earlier
Exception
As per Service tax rules, invoice to be issued within 30 days of service provided. In case, invoice not issued within prescribed time, as per service tax rules(30 days in normal cases,45 days in case of NBFC),
then Point of taxation is
Date of Completion of service
Or
Amount received
Whichever is earlier
SUMMARY
|
INVOICE ISSUED WITHIN 30 DAYS OF SERVICE PROVIDED |
INVOICE NOT ISSUED WITHIN 30 DAYS OF SERVICE PROVIDED |
|
POT Is Date of Invoice or Date of Payment which ever is earlier |
POT is Date of Service Provided or Date of Payment which ever is earlier |
Examples
Q1 Service provided on 15 July
What is the last date of issuing invoice?
View answer
Invoice is to be issued within 30 days of Service Provided
i.e.
15 July+30 days
=14 August
Q2 Suppose invoice actually issued on 18 August and amount received on 20 November
When is Service tax to be deposited?
View answer
Since Invoice not issued within 30 days
Point of Taxation is
Date of Service Provided (15 July)
or
Date of Payment (20 Nov)
which ever is earlier (15 July)
and to be deposited by 6th of next month (i.e. 6 August)
-ea-
Q3
Suppose invoice actually issued on 5 August and amount received on 20 November
When is Service tax to be deposited?
View answer
Since Invoice issued within 30 days
Point of Taxation is
Date of Invoice (5 August)
or
Date of Payment (20 November)
which ever is earlier (i.e 5 August)
Summary
INVOICE ISSUED WITHIN 30 DAYS OF SERVICE PROVIDED
INVOICE ISSUED AFTER 30 DAYS OF SERVICE PROVIDED
PAYMENT IN ADVANCE- Pot is Date of Payment
PAYMENT IN ADVANCE- Pot is Date of Payment
SERVICE PROVIDED ,THEN PAYMENT RECEIVED,LATER INVOICE ISSUED AFTER 30 DAYS
In case of part payment received in advance
Only the amount received in advance will be taxable
If service tax not collected, then amount received will be deemed to be including service tax
Advance Money Returned
In this case, when advance money received, point of taxation is applicable and service tax to be deposited to government.
It does not matter, that the total amount including service tax is returned
This extra amount of service tax deposited can be adjusted against service tax liability of next period.