what is the point of taxation

[Guest]

Dear Sir,

As we are manufacturer we have to pay the service tax under RCM.

My question is in case of GTA.manpower supplier and work contract they raised invoices prior to 15 Nov and we are availed the service prior to 15 Nov. But in case of labor contractor it is continuous service for the period of one month and he raised bill at the month end.

but we accounted this invoices after 15 Nov and payment made also after 15 Nov in that case which service tax will be applicable 14% or 14.50 % under Reverse charge mechanism.

Regards

Swapneswar Muduli

[Ganeshan Kalyani]

As per Rule 7 of The point of taxation Rules, 2011, 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. In your case the payment to service provider will be done after 15th Nov 2015 and therefore 14.5% will be applicable in all services mentioned in your query.

[CSSANJAY MALHOTRA]

Dear,

In addition to views of Sh. Ganeshan, please find extracts of FAQ issued by CBEC in relation to SBC..

Q. 19 How would liability be determined in case of reverse charge services where services have been received prior to 15.11.2015 but consideration paid post 15.11.2015?

Ans. In respect of reverse charge mechanism, SBC liability is determined in accordance with Rule 7 of Point of Taxation Rules, as per which, point of taxation is the date on which consideration is paid to the service provider. Thus, SBC liability in such case will be 0.5% X Value of taxable service.

AI Summary

Point of taxation determines applicable tax rate for reverse-charge services when payment occurs after a rate change. The question addresses which tax rate applies to reverse-charge services received before a statutory rate change but paid after it. Under the Point of Taxation Rules, the point of taxation for recipients liable under the Reverse Charge mechanism is the date of payment; therefore the tax and related cess applicable on the date of payment apply, including on continuous services billed at month end.