TMI BlogAmendments in Point of Taxation Rules, 2011 and other related provisionsX X X X Extracts X X X X X X X X Extracts X X X X ..... certain amendments are being carried out in these rules vide Notification No. 25/2011-ST dated 31.03.2011. The highlights of the changes are discussed in the following paragraphs. 2. While the rules shall come into force from 01.04.2011, an option has been given in rule 9 to pay tax on payment basis, as at present, till 30.06.2011. 3. Rule 3 has been amended to provide that the point of taxation shall be as follows: (a) Date of invoice or payment, whichever is earlier, if the invoice is issued within the prescribed period of 14 days from the date of completion of the provision of service. (b) Date of completion of the provision of service or payment, if the invoice is not issued within the prescribed period as above. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rates at which tax is payable are provided under rule 6 ( 7, 7A, 7B or 7C ) of the Service Tax Rules, 1994 as well as the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. Thus, whenever these values or the composition rates are changed, it would have the same effect as the change in the rate of duty. It is hereby further clarified that the rate of tax shall also include any other notification which is issued, rescinded or amended and has the effect of altering the taxability of any service. 5. Rule 6 relating to continuous supply of service has been aligned with the revised rule 3 and the date of completion of continuous service has been defined within the rule. This date shall be the date of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of failure to issue the invoice within the prescribed period, the date of completion of provision of service shall come into effect even if payment is not made. 8. Rule 7 has thus been replaced by a new provision whereby the point of taxation shall be the date of making or receiving the payment, as the case may be. This provision shall apply to the following: (i) Export of services; (ii) Persons, where the obligation to pay tax is on the service recipient in terms of rule 2(1)(d) of the Service Tax Rules, 1994 in respect of services notified under section 68(2) of the Finance Act, 1994. (ii) Individuals, proprietorships and partnership firms providing specified services (Chartered Accountant, Cost Accountant, Company Secr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.03.2011 and have a close relationship with the Point of Taxation Rules as follows: (i) The obligation to issue invoice shall be within 14 days of completion of service and not provision of service. (ii) If the amount of invoice is renegotiated due to deficient provision or in any other way changed in terms of conditions of the contract (e.g. contingent on the happening or non-happening of a future event), the tax will be payable on the revised amount provided the excess amount is either refunded or a suitable credit note is issued to the service receiver. However, concession is not available for bad debts. 12. The credit of input services under rule 4 (7) of the Cenvat Credit Rules has also been liberalized vide notification No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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