Budget 2012-2013 - Amendments in Point of Taxation Rules 2011

Sr. No.

Particulars

Old Provisions

New Provisions

Effective Date

1.

Meaning of “change in effective rate of tax” – Rule 2(ba)

Earlier it was part of  Rule 4 as explanation

“change in effective rate of tax” shall include a change in the portion of value on which tax is payable in terms of a notification issued in the Official Gazette under the provisions of the Act, or rules made thereunder.

1-4-2012

2.

Meaning of “continuous supply of service: - Rule 2(c)

“or to be provided continuously, under a contract, for a period exceeding three months,”

“or to be provided continuously or on recurrent basis, under a contract, for a period exceeding three months with the obligation for payment periodically or from time to time”

1-4-2012

3.

Date of payment – Rule 2A

Not existing

In normal circumstances this date shall be the earlier of the dates of entry into books of accounts or actual credit in the bank account (when applicable).

However, when there is change in effective rate of tax or a new levy between the said two dates, the date of payment shall be the date of actual credit in the bank account, if the amount is credited through a banking instrument more than four working days after the date of such change.

This will have no impact where invoice is the basis for point of taxation. Thus business may be advised to take steps to deposit all advances received up to March 31, 2012 in their bank accounts suitably. Any delay in this regard will lead to charging tax at higher rate.

4.

Payment of tax in case of new services in case of advance receipt – Rule 5

(b) no tax shall be payable if the payment has been received before the service becomes taxable and invoice has been issued within the period referred to in rule 4A of the Service Tax Rules, 1994..

(b) 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.

1-4-2012

5.

Residual provision for determination of POT – new rule 8A

Not existing

Where the POT  cannot  be determined

Central Excise officer shall determine the POT after seeking accounts, documents or other evidence.

1-4-2012