Budget VII- Effect of POT Rules 2011 on change in Service Tax Rate

[CA Akash Phophalia]

BUDGET - VII (POT Rules)

Effect of POT Rules, 2011 on change in rate of Service Tax.

Although this effect is to be reckoned from the effective date as notified by the Central Government.

Sr. No.	Taxable Service Provided	Issue of Invoice	Receipt of Payment	Point of Tax	Rate Applicable
1.	Before	After	After	Earlier of date of payment/issue of invoice	14%
2.	Before	Before	After	Date of issue of invoice	12.36%
3.	Before	After	Before	Date of payment	12.36%
4.	After	Before	After	Date of Payment	14%
5.	After	Before	Before	Earlier of date of payment / Issue of Invoice	12.36%
6.	After	After	Before	Date of issue of Invoice	14%

Note:-

1. The proposed levy of Swachh Bharat Cess @ 2% is also in the nature of service tax as narrated in clause 117 of the Finance Bill 2015. Thus POT rules shall equally apply to it in the same manner as mentioned above.
2. The words ‘Before’ and ‘After’ in the above table mean before/after the date to be notified.
3. In case of Sr. No. 3 and Sr. No. 5 above, if the payment is not credited in the bank within 4 working days from the date when there is change in effective rate of tax, the new rate of 14% would apply. (Rule 2A of POT Rules,2011)
4. The rate of 12.36% is inclusive of Education Cess and SHE Cess.

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