Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: due date for vat payment :: Central Excise rule to resale the machines to a new company :: VAT RATES :: list of goods taxed at 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: cpt :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: empanelment :: form 3cd :: ACCOUNTING STANDARDS :: ACCOUNTING STANDARD :: articles on VAT and GST in India :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: TDS
 
 
« Latest Circulars »
 RBI Working Paper Series No. 5/2017: Comparison of Consumer and Wholesale Prices Indices in India: An Analysis of Properties and Sources of Divergence
 All Agency Banks and select offices of RBI to remain open on all days from March 25, 2017 to April 1, 2017
 RBI-Sources of Variation in Foreign Exchange Reserves in India during April-December 2016
 Developments in India’s Balance of Payments during the Third Quarter (October-December) of 2016-17
 RBI signs Memorandum of Understanding(MoU) on “Supervisory Cooperation and Exchange of Supervisory Information” with the Bank of Thailand
 RBI-Meeting Schedule of the Monetary Policy Committee for 2017-18
 RBI to conduct Overnight, 7 day and 14 day Variable rate Reverse Repo auctions under LAF on March 22, 2017
 Risk Management and Inter-bank Dealings: Operational flexibility for Indian subsidiaries of Non-resident Companies
 Master Directions on Issuance and Operation of Prepaid Payment Instruments in India
 RBI seeks comments on draft circular on Master Directions on Issuance and Operation of Pre-paid Payment Instruments (PPIs) in India
  Annual Closing of Government Accounts – Transactions of Central / State Governments – Special Measures for the Current Financial Year (2016-17)

Clarification on Point of Taxation Rules
July, 07th 2012

 

Circular No. 162/13 /2012 ST

 

F. No. 354/111/2012-TRU

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

(Tax Research Unit)

*******

Room No 146, North Block, New Delhi-1,

Dated the 6th July 2012.

To

 

Chief Commissioner of Customs and Central Excise (All)

Chief Commissioner of Central Excise & Service Tax (All)

Director General of Service Tax

Director General of Central Excise Intelligence

Director General of Audit

Commissioner of Customs and Central Excise (All)

Commissioner of Central Excise and Service Tax (All)

Commissioner of Service Tax (All)

 

Madam/Sir,

 

Subject:  Clarification on Point of Taxation Rules - regarding.

 

            Consequent to the changes introduced at the time of Budget 2012 in the Point of Taxation Rules, 2011, together with revision of the service tax rate from 10% to 12% and the subsequent changes that have been made effective from 01.07.2012, the following clarifications have been desired:

(a)           Point of taxation and the rate applicable in respect of continuous supply of services at the time of change in rates effective from 01.04.2012;

(b)           Applicability of the revised  rule 2A of the Service Tax (Determination of Value) Rules, 2006 to ongoing works contracts for determination of value when the value was being determined under the erstwhile Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007; and

(c)           Applicability of partial reverse charge provisions in respect of specified services.

 

2.1        The issues have been examined.  The continuous supply of services was governed by rule 6 until 31.03.2012.  The rule started with the wordings notwithstanding anything contained in rules 3, 4 Therefore, the point of taxation in respect of services provided in terms of the said rule on or before 31.03.2012 would remain unaffected by rule 4.

 

2.2        To clarify the matter further, if the invoice had been issued or payment received in respect of such services on or before 31.03.2012, the point of taxation would stand determined under rule 6 accordingly and shall not alter due to the subsequent changes in the Point of Taxation Rules, 2011 that became effective only from 1.4.2012.

 

3.1        However the position has undergone a change at the time of transition towards the Negative List and the introduction of other accompanying changes in Service Tax (Determination of Value) Rules, 2006 and partial reverse charge.  At the said time rule 6 stood omitted and the point of taxation was required to be determined ordinarily in such cases under the main rule i.e. rule 3.   This rule is, however, overridden by rule 4 when there is a change in effective rate of tax.  The change in effective rate of tax has been defined in clause (ba) of rule 2 to include a change in the portion of value on which tax is payable. 

 

3.2        To illustrate, the following would be changes in effective rate of tax:-

(i)         the change in the portion of total value liable to tax in respect of works contract other than original works (from @ 4.8% earlier to @ 12% on 60% of the total amount charged, or effectively @ 7.2% now).

(ii)         exemption granted to certain works contracts w.e.f. 1st July 2012 which were earlier taxable.

(iii)        taxability of certain works contracts which were hitherto exempted.

(iv)        change in the manner of payment of tax from composition scheme under the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 to payment on actual value under clause (i) of rule 2A of the Service Tax (Determination of Value) Rules, 2006.

 

3.3        However, the following will not be a change in effective rate of tax:-

(i)         works contracts earlier paying service tax @ 4.8% under Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 and now required to pay service tax @12% on 40% of the total amount charged, keeping the effective rate again at 4.8% (as only the manner of expression has been altered).

(ii)         works contracts which were outside the scope of taxation (and not merely exempted) but have become now taxable e.g. construction of residential complex comprising of  2 to 12 residential units,  construction of buildings meant for use by NGOs etc. (Rule 5 of the Point of Taxation Rules, 2011 shall apply to such services.)

 

3.4        Thus the point of taxation for services provided in respect of taxable works contracts in progress on 01.07.2012 would need to be determined under rule 4 of the Point of Taxation Rules unless there is no change in effective rate of tax.

 

4.         It is further clarified that the provisions of partial reverse charge would also be applicable in respect of such services where point of taxation is on or after 01.07.2012 under the applicable rule in respect of the service provider.

 

5.         This Circular may be communicated to the field formations and service tax assessees, through Public Notice/ Trade Notice. Hindi version to follow.

 

 Yours faithfully,

 

 

(Dr. Shobhit Jain)

O.S.D. (TRU)

Fax: 23093037

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Outsourcing Company Offshore Software Outsourcing Software Outsourcing Company India Offshore Outsourcing Company India Software BPO Software Business Process Outsourcing Software Outsourcing India Offsho

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions