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

Clarification on 'Date of Payment' under Reverse Charge: Rule 7 states it's when service receiver pays provider. A forum participant inquired about the 'date of payment' under the reverse charge mechanism for service tax, specifically questioning whether it refers to the date of payment to the service provider or to the government. A respondent clarified that, according to Rule 7 of the Point of Taxation Rules, 2011, the date of payment is when the service receiver pays the service provider. Additionally, the applicable service tax rate is determined based on the rate in effect when the service is provided. Another participant concurred with this explanation.