What is Point of Taxation Rules in Service Tax?

what is point of taxation‘ Point of Taxation Rules ’ determines the point in time when the services shall be deemed to be provided.

Point of taxation rule made effective from 01.04.2011.

The general rule will be that the time of provision of service will be the earliest of the following dates:

i. Date on which service is provided or to be provided – Date of completion of service

ii. Date of invoice – Date on which invoice made

iii. Date of payment – Date on which payment made

In this rule certain conditions requires to be fulfilled –

(a) “Act” means the Finance Act, 1994 (32 of 1994);

(b) “Associated enterprises” shall have the meaning assigned to it in section 92A of the Income-tax Act, 1961 (43 of 1961);

(c)  “Continuous supply of service” means any service which is provided, or to be provided continuously, under a contract, for a period exceeding three months, or where the Central Government, by a notification in the Official Gazette, prescribes provision of a particular service to be a continuous supply of service, whether or not subject to any condition;

(d)  “Invoice” means the invoice referred to in rule 4A of the Service Tax Rules, 1994 and shall include any document as referred to in the said rule;

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

(f)  “Taxable service” means a service which is subjected to service tax, whether or not the same is fully exempt by the Central Government under Section 93 of the Act.

In short, Point of taxation determines that when tax on service provided by you is leviable.

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