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CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX by g. natarajan advocate, swamy associates

CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

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CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX . by g. natarajan advocate, swamy associates. POINT OF TAXATION RULES. Introduced vide Notification 18/2011 ST Dt. 01.03.2011. Effective from 01.04.2011 / 01.07.2011. - PowerPoint PPT Presentation

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Page 1: CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

by g. natarajanadvocate, swamy associates

Page 2: CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

POINT OF TAXATION RULES Introduced vide Notification 18/2011 ST Dt. 01.03.2011.

Effective from 01.04.2011 / 01.07.2011.

Good Bye to realisation based Service Tax payment – Rule 6 of ST Rules, 1994.

Not applicable to Individuals, Proprietary concerns & Partnership firms of

- Chartered Accountants. - Cost Accountants. - Company Secretaries. - Architects. - Interior Decorators. - Legal services. - Scientific and Technical Consultancy services. - Consulting Engineers.

Page 3: CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

Rule 6 of the Service Tax Rules 6. Payment of service tax. The service tax shall be paid to the credit of the Central Government,(i)by the 6th day of the month, if the duty is deposited electronically through internet banking; and(ii) by the 5th day of the month, in any other case,

Immediately following the calender month in which the service is deemed to be provided as per the rule framed in this regard.

Rule 2(e) of the Point of Taxation Rules

“Point of taxation means the point in time when a service shall be deemed to have been provided”

Page 4: CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

Rule 3 of the Point of Taxation Rules 3. Determination of point of taxation.- For the purposes of these rules, unless otherwise provided, 'point of taxation' shall be,-

(a) the time when the invoice for the service provided or to be provided is issued:Provided that where the invoice is not issued within fourteen days of the completion of the provision of the service, the point of taxation shall be date of such completion.

(b) in a case, where the person providing the service, receives a payment before the time specified in clause (a), the time, when he receives such payment, to the extent of such payment.

Explanation.- For the purpose of this rule, wherever any advance by whatever name known, is received by the service provider towards the provision of taxable service, the point of taxation shall be the date of receipt of each such advance.”.

Page 5: CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

Provision of Service or Issue of Invoice or Receipt of Payment – whichever is earlier – Is the point of taxation.

S.No. Date on which service was provided

Date on which invoice was issued

Date on which payment was received

Point of Taxation

1 10th July 2011 15th July 2011 15th August 2011 15th July 2011

2 10th July 2011 15th August 2011 15th September 2011

10th July 2011

3 10th August 2011 5th July 2011 15th August 2011 5th July2011

4 10th September 2011 5th September 2011 5th August 2011 5th August 2011

Page 6: CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

Month Customer What I did? ST to be paid on

July 2011 X Provided service 05.08.2011July 2011 Y Received advance 05.08.2011July 2011 Z Issued Invoice 05.08.2011Aug 2011 X Issued Invoice Already paidAug 2011 Y Provided service Already paidAug 2011 Z Received Payment Already paidAug 2011 X Received Payment Already paidAug 2011 Y Issued Invoice Already paidAug 2011 Z Provided service Already paidAug 2011 A Received advance 05.09.2011Aug 2011 B Provided service 05.09.2011Aug 2011 C Issued Invoice 05.09.2011

Page 7: CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

CONTINUOUS SUPPLY OF SERVICE

“continuous supply of service” means any service which is provided, or to be provided continuously, under a contract, for a period exceeding three months & services specifically notified, viz., commercial or industrial construction, construction of complex, telecommunication, internet telecommunication & works contract.

Explanation 1.– For the purpose of this rule, where the provision of the whole or part of the service is determined periodically on the completion of an event in terms of a contract, which requires the service receiver to make any payment to service provider, the date of completion of each such event as specified in the contract shall be deemed to be the date of completion of provision of service.

Circular No. 144/13/2011 Dt. 18.07.2011.

Page 8: CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

SPECIAL PROVISIONS

For export of services, POT shall be the date of receiving payment. (But payment should be received within the time prescribed by RBI).

Reverse Charge Liabilities – Date of making payment. (But payment should be made within 6 months)

Associated enterprises – date of credit in books / date of payment whichever is earlier.

IPR Services – when payment is made / received.

Page 9: CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

MISCELLANEOUS

Adjustment of ST paid, if service is not provided (wholly or partially) or the value is renegotiated, subject to refund / credit note in favour of the customer {Rule 6(3) of ST Rules, 1994}.

No relief for Bad Debts.

Page 10: CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

POT IN CASE OF CHANGE OF ST RATES

Page 11: CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

Issue of Invoice Receipt of Payment

POT

After change of rate

After Change of rate

Date of Invoice or Date of payment,

whichever is earlier – New

Rate will applyRule 4 (a) (i)

Before change of rate

After Change of rate

Date of Invoice – Old Rate will

applyRule 4 (a) (ii)

After Change of Rate

Before Change of Rate

Date of payment – Old Rate will

applyRule 4 (a) (iii)

Service provided before change of rate

Page 12: CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

Issue of Invoice Receipt of Payment

POT

Before change of rate

After Change of rate

Date of Payment– New Rate will

applyRule 4 (b) (i)

Before change of rate

Before Change of rate

Date of Invoice or Date of payment

whichever is earlier– Old Rate

will applyRule 4 (b) (ii)

After Change of Rate

Before Change of Rate

Date of Invoice – New Rate will

applyRule 4 (b) (iii)

Service provided after change of rate

Page 13: CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

Applicability of change of rate – Service provided before change of rate. (Assuming the service provider has opted for POT from 1st April 2011 and the rate of tax changed on 1st July 2011)

Date of provision of service

Date of Invoice Date of receipt of payment

Point of taxation and applicable rate.

June 2011 1st July 2011 1st August 2011 1st July 2011 – New rate

June 2011 1st August 2011 1st July 2011 1st July 2011 – New rate

June 2011 30th June 2011 15th July 2011 30th June 2011 – Old Rate

June 2011 15th July 2011 30th June 2011 30th June 2011 – Old Rate

Page 14: CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

Applicability of change of rate – Service provided after change of rate. (Assuming the service provider has opted for POT from 1st April 2011 And the rate of tax changed on 1st July 2011)

Date of provision of service

Date of Invoice Date of receipt of payment

Point of taxation and applicable rate.

July 2011 30t June 2011 1st August 2011 1st August 2011 – New rate

July 2011 1st May 2011 30th June 2011 1st May 2011 – Old rate

July 2011 30th June 2011 1st May 2011 1st May 2011 – Old Rate

July 2011 15th July 2011 30th June 2011 15th July 2011 – New Rate

Page 15: CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

g. natarajan93400 [email protected]