Executive Summary:
This notification from the Ministry of Finance, Department of Revenue, introduces the Point of Taxation Second Amendment Rules, 2016. It amends the Point of Taxation Rules, 2011, regarding changes in service tax liability. The amendment addresses the point of taxation when there is a change in tax liability and the invoice has been issued before the change but payment is made after.
Key Points / Main Content:
Amendments to Point of Taxation Rules, 2011:
* The notification introduces the Point of Taxation Second Amendment Rules, 2016.
* These rules further amend the Point of Taxation Rules, 2011.
Rule 7 Amendment:
* A proviso is inserted after the second proviso in Rule 7 of the Point of Taxation Rules, 2011.
* The amendment addresses situations where there is a change in the liability or extent of liability of a person required to pay tax as a recipient of service.
* If the service is provided and the invoice is issued before the date of such change, but payment has not been made by that date, the point of taxation will be the date the invoice was issued.
Impact Analysis:
Recipients of Notified Services under Section 68(2) of the Finance Act, 1994:
* Impact: Affected by changes in the liability or extent of liability for service tax. The rule clarifies the point of taxation in specific scenarios where invoices are issued before a change in tax liability, but payment occurs after.
* Action Required: Understand the amended Rule 7 to determine the correct point of taxation for services rendered and invoiced before a change in tax liability, especially when payment is made after the change.
Key Entities Referenced
Point of Taxation Rules, 2011: A set of rules related to service tax, which is being amended by this notification.
Point of Taxation Second Amendment Rules, 2016: The short title of the rules introduced by this notification, amending the Point of Taxation Rules, 2011.
Finance Act, 1994: The Act of the Parliament of India that governs service tax, which is being amended.
Section 94 of the Finance Act, 1994: The section of the Finance Act, 1994 which grants powers to the Central Government to make rules regarding service tax.
Ministry of Finance: The ministry responsible for revenue collection, which issued this notification.
Department of Revenue: The department within the Ministry of Finance that deals with revenue matters, including service tax.
New Delhi: The location where the notification was issued.
Service Tax: Tax levied on services provided in India.
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1570 GI/2016 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)]
MINISTRY OF FINANCE
(Department of Revenue)
NOTIFICATION
New Delhi, the 30th March, 2016
No. 21/2016-Service Tax
G. S. R. 370(E).— In exercise of the powers conferred by clause (a) and clause (hhh) of sub- section (2) of
section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to
amend the Point of Taxation Rules, 2011, namely :—
1. These rules may be called the Point of Taxation (Second Amendment) Rules, 2016.
2. In the Point of Taxation Rules, 2011, in rule 7, after second proviso, the following proviso shall be
inserted, namely,–
“Provided also that where there is change in the liability or extent of liability of a person required to pay tax as
recipient of service notified under sub-section (2) of section 68 of the Act, in case service has been provided
and the invoice issued before the date of such change, but payment has not been made as on such date, the point
of taxation shall be the date of issuance of invoice.”.
[F. No. B-1/4/2016-TRU]
K. KALIMUTHU, Under Secy.
Note.—The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section
(i), vide notification No. 18/2011 – Service Tax, dated the 1st of March, 2011 vide number G.S.R. 175(E),
dated the 1st of March, 2011 and was last amended vide notification No. 10/2016 - Service Tax dated 1st March,
2016 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number
G.S.R. 258(E), dated the 1st March, 2016.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.