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

Reverse charge service tax: recipient's payment triggers liability or alternative point of taxation applies; timely deposit required. Under the reverse charge mechanism the service recipient's tax liability arises on making payment or within the specified period from the invoice date, whichever is earlier; if payment occurs within that period the tax must be discharged and remitted by the normal monthly due date with interest for late payment. If payment is not made within the specified period, the point of taxation is determined under the relevant point-of-taxation rule.