CA NeWs Beta*: With respect to raising invoices to the Clients, the Point of Taxation Rules, 2011 have to be considered to determine the correct rate to be levied from 12.36 percent to 14 percent

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Wednesday, May 27, 2015

With respect to raising invoices to the Clients, the Point of Taxation Rules, 2011 have to be considered to determine the correct rate to be levied from 12.36 percent to 14 percent

This is to bring to your notice that the recent change made by the Ministry of Finance vide Notification No. 14/2015 ST dated 19th May, 2015 so as to increase the leviable rate of service tax from 12.36 percent to 14 percent, being effective from 1st June, 2015.
 
With respect to raising invoices to the Clients, the Point of Taxation Rules, 2011 have to be considered to determine the correct rate to be levied. To know whether a service has been provided or agreed to be provided for a consideration and its point of taxation, three main ingredients i.e.:
 
(a) provision of taxable service,
(b) raising of invoice, and
( c) receipt of payment are important.
 
As per Rule 4 of the Point of Taxation Rules, 2011 following should be considered to understand applicable service tax rate:
 
POINT OF TAXATION RULES, 2011
Condition
Applicable Rule
Invoice Issued
Payment Received
Rate
Taxable Service Provided  before rate change
Rule 4(a)(i)
After rate change
After rate change
14%
Rule 4(a)(ii)
Before rate change
After rate change
12.36%
Rule 4(a)(iii)
After rate change
Before rate change
12.36%
Taxable Service Provided  after rate change
Rule 4(b)(i)
Before rate change
After rate change
14%
Rule 4(b)(ii)
Before rate change
Before rate change
12.36%
Rule 4(b)(iii)
After rate change
Before rate change
14%
 
Please make the changes as per the above mentioned conditions as and when applicable.
 

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