Date of payment under reverse charge

[yateen vyas]

Sir,

Under reverse charge Point of taxation will be 'date of payment' .Now my question is that which date of payment is this ? ,

(1) date of payment to service provider by service receiver or

(2) date of payment to govt by service receiver under challan.

Specially in case of rate of service tax is changed.

Thanks in advance.

[Rajagopalan Ranganathan]

Sir,

As per rule 7 of POTR,2011-

¹[7.Determination of point of taxation in case of specified services or persons.-

Notwithstanding anything ²[contained in rules 3,4, or 8], 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, shall be the date on which payment is made (by the service receiver):

³[Provided that where the payment is not made within a period of three months of the date of invoice, the point of taxation shall be the date immediately following the said period of three months]

Provided further that in case of “associated enterprises”, where the person providing the service is located outside India, the point of taxation shall be the date of debit in the books of account of the person receiving the service or date of making the payment whichever is earlier.]

(emphasis supplied by me)

In view of the above date of payment means the date of payment made by receiver of the service to the provider of service.

Regarding rate of service tax , as per Section 67 A of Finance Act, 1994, the rate of service tax, value of a taxable service and rate of exchange, if any, shall be the rate of service tax or value of a taxable service or rate of exchange, as the case may be, in force or as applicable at the time when the taxable service has been provided or agreed to be provided.

[Ganeshan Kalyani]

I agree with Mr. Rajagopalan Ranganathan sir

AI Summary

Point of taxation under reverse charge: payment by service receiver to provider determines tax point, with exceptions. Point of taxation under reverse charge is the date of payment by the service receiver to the provider; if payment is not made within three months of the invoice the point of taxation is the day after that period. For associated enterprises with providers outside India the point is the earlier of the debit in the recipient's books or the payment date. The rate and value applicable are those in force when the service is provided or agreed to be provided.