Service Tax on payment basis

[RAM SHARMA]

Dear Experts, A service tax liability arises when a service receipient make a payment. It means a Service receiver is liable  to pay tax when he will make a payment. Am i write. Pl advice.

Thanks

[JAMES PG]

In case of reverse charge mechanism, service receiver is liable to discharge ST liability when he makes payment or within six months from the date of the Invoice of the service provider, whichever occurs first

[YAGAY andSUN]

Correctly answered by Mr. James.

[Vijay kumar]

Liability arises in the month of payment. Tax is to be paid by 6th of the following month, failing which it has to be paid with interest. However, this is when the payment is made within 6 months from the date of invoice issued by the service provider. If not, the point of taxation has to be determined in terms of Rule 3 of PTR, 2011. In my view, "whichever occurs first" has no meaning in this context.

AI Summary

Service Tax Due on Payment or Within Six Months; Rule 3 Applies for Delays Beyond Six Months. A service tax liability for the recipient arises upon making a payment, particularly under the reverse charge mechanism. The recipient must discharge the tax liability either at the time of payment or within six months from the invoice date, whichever is earlier. If payment is made within six months, the tax must be paid by the 6th of the following month, or interest will accrue. If the payment exceeds six months, the point of taxation is determined by Rule 3 of the Point of Taxation Rules, 2011. One participant noted that the 'whichever occurs first' clause may not be applicable.