POINT OF TAXATION ??

[abbas mukhi]

SIR,

OUR COMPANY HAS CONTRACT WITH OTHER PARTY FOR RENTING OF IMMOVABLE PROPERTY FOR PERIOD OF 30 YEARS

AS PER AGREEMENT WE HAVE "RIGHT TO RECEIVE" ADVANCE PAYMENT FOR THE "PARTICULAR PERIOD"

BEFORE STARTING OF PARTICULAR PERIOD WE ARE "ISSUING REMINDER" TO PARTY FOR "REMITTANCE OF PAYMENT"

ON RECEIVING AMOUNT WE PREPARE SALE ACCOUNT FOR BOOKING INTO ACCOUNTS

WHAT IS POINT OF TAXATION FOR SERVICE TAX IN ABOVE TRANSACTION ??

AI Summary

Point of taxation: advance receipt generally fixes tax point; otherwise invoice date determines liability for advance rent services.
Advance payments received for renting immovable property fix the point of taxation at the date of receipt of each advance per the Explanation to Rule 3, Point of Taxation Rules, 2011. Qualification as a continuous supply depends on the agreement. If no advance is received, the date of issue of the invoice becomes the point of taxation and the service provider must pay tax on the billed amount irrespective of receipt. Reminders or demand notes do not substitute for receipt; they are attempts to realize payment.