1. Point Of Taxation Rules
- CA Shankara Narayanan V

2. Purpose and Need To fix the Point of Taxation for Service Tax Payment
Applicability of Rate of Service Tax
In case of change in Effective Rate of Service Tax
In case of Services becoming Taxable for first time
Reverse Charge Services
Specific Services

3. Structure of Rules Rule 2 Definitions Rule 3
Determination of Point of Taxation – Basic Rule
Rule 3(a)
Determination of PoT where invoice has been issued for service provided or to be provided
Rule 3(b)
Determination of PoT where payment has been received before the time provided in Rule 3(a)
Rule 4
Determination of Point of Taxation – Change in effective Tax rate
Rule 4(a)
Determination of PoT where service has been provided before the change in effective rate of tax
Rule 4(b)
Determination of PoT where service has been provided after the change in effective rate of tax
Rule 5
Determination of PoT where tax is being levied on the service for the first time
Rule 7
Determination of PoT in case of specified services or persons
Rule 8
Determination of PoT where service in the case of copyright, trademarks, designs or patents
Rule 9
Transitional Provisions

4. Rule 3 – Basic Rule Can be called as 3-2-1 rule
Date of Completion of Service
If Invoice raised within 30 days
Date of Invoice
YES
Date of Invoice
Date of Payment NO
Date of Completion of Service
Date of Payment

5. Rule 3 – Basic Rule contd…
3 situations where Rule 3 can be overlooked
Continuous Supply of Service
Minor Excess Payment
Proviso to Rule 6 of ST Rules
Exceeding 3 months
Excess up to Rs. 1,000
Small Service Providers up to Rs. 50 lakhs
Periodic Payment
Any Service is eligible
2 Services notified are
Telecommunication Service
Works Contract (Service)

6. Rule 4 – Change in Effective Tax Rate – Rule of Majority
Date of Provision of Service to Customer
Date of Invoice to Customer
Date of Receipt of Payment from Customer
Point of Taxation
Rate Applicable
BEFORE change in Rate (up to 31st May)
AFTER change in Rate (from 1st June)
Date of Invoice
Old Rate (12.36%)
Date of Receipt of Payment
Date of Invoice or Payment whichever is earlier
New Rate (14%)

7. Rule 5 – Service Taxable for first Time
From Negative List (Section 66D) or from Mega Exemption (Notn 25/2012)
Invoice & Payment BEFORE taxability
Not Taxable if
Payment BEFORE & Invoice issued within 14 days of taxability
Date of Providing or agreeing to provide Services Ignored

8. Few important things to ponder
Section 67A
The rate of service tax, value of a taxable service and rate of exchange, if any, shall be the rate of service tax or value of a taxable service or rate of exchange, as the case may be, in force or as applicable at the time when the taxable service has been provided or agreed to be provided.
Rule 2A: Date of payment
For the purposes of these rules, "date of payment" shall be the earlier of the dates on which the payment is entered in the books of accounts or is credited to the bank account of the person liable to pay tax:
Provided that —
(A) the date of payment shall be the date of credit in the bank account when —
(i) there is a change in effective rate of tax or when a service is taxed for the first time during the period between such entry in books of accounts and its credit in the bank account; and
(ii) the credit in the bank account is after four working days from the date when there is change in effective rate of tax or a service is taxed for the first time; and
(iii) the payment is made by way of an instrument which is credited to a bank account,
(B) if any rule requires determination of the time or date of payment received, the expression "date of payment" shall be construed to mean such date on which the payment is received;

9. Rule 7 – PoT for Specified Persons (Reverse Charge)
Import of Service from Associated Enterprise
All other Reverse Charge
If Date of Payment within 3 months from Invoice
Whichever is Earlier of
YES NO
Date of DEBIT in the books of Service Receiver
Date of PAYMENT
First Day after 3 months

10. Associated Enterprise
Associated Enterprise - Section 92A(1)
(a) which participates, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise; or
(b) in respect of which one or more persons who participate, directly or indirectly, or through one or more intermediaries, in its management or control or capital, are the same persons who participate, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise
Sec. 92A(2) deems two enterprise to be associated if there exists between them some kind of economic, executive, financial or business relationship or there is some kind of mutual interest.

11. Rule 7 – PoT for Specified Persons (Reverse Charge) contd…
Insurance related services by agents
Goods Transportation By Road
Sponsorship
Arbitral tribunals
Legal services
Corporate director’s services
Services provided by Government / local authority excluding specified services
Services provided by persons located in non-taxable territory to persons located in taxable territory
Manpower supply & security services
Services by Mutual fund agent or distributor to Asset Management Company
Lottery ticket distributor or agent
Partial Reverse Charge
Renting of motor vehicles
Works contracts

12. Rule 8 – PoT for Copyrights, Patents and the like IPR
Whichever is Earlier of
Receipt of Payment
Issue of Invoice
Date of Providing or agreeing to provide Services Ignored

13. THANK Q ? CA Shankara Narayanan V +91 96000 89209