No Service Tax Leviable on the issuance of Draft Invoices
PrintListen to this Article
With the Introduction of Point of Taxation Rules (herein referred as POT Rules), 2011, the government has primarily shifted the policy of collection of service tax on the realization of value of taxable services to the point when the service is deemed to have been provided. The Rule 3 of POT Rules, spelt out the provisions when the point of taxation takes place ie. the point in time when a service shall be deemed to have been provided, shall takes place. As per Rule 3 of POT Rules, the date on which service shall be deemed to be provided would be, the date of payment received or invoice issued for the services provided, whichever is earlier, provided the invoice is issued as per Rule 4A of Service Tax Rules, 1994. Rule 4A lays down the prescribed format and time period within which invoice should be issued.
Now, here the question arises that, whether service tax shall become liable incase a draft invoice or letter is issued by the service provider. In reference to this, the ministry of finance examined the issue and issued a Circular No. 166/1/2013 –ST, dated 1st January 2013 where it was clarified that, under Point of Taxation Rules 2011, invoice referred is the invoice issued under Rule 4A of the service tax rules, 1994, therefore, no tax point arises on account of issuance of any reminder letters/notices. This clarification assume a great significance as various service providers send their proposals through letters/communication or with draft invoices, therefore in all such cases no service tax shall be leviable merely on the issuance of such proposal through letters or draft invoices.
Further, also, in the same matter, Life Insurance companies approached to the ministry of finance for seeking their clarification about the applicability of service tax on the basis of reminder notices/letters bring issued to policy holder for renewal of their policy. It was contended that such reminder notices are issued only to solicit business and furtherance of services and only after acceptance by the policy order by making payment of premium, will result into service.
Category : Service Tax | Comments : 0 | Hits : 415
CENVAT CREDIT ON SET TOP BOX INTRODUCTION Service providers have at least a Telephone in their office. They are paying service tax on the telephone charges. The service tax on telephone charges becomes a part of the cost for the service provider. When he collects service tax from the customer it becomes tax on tax which increases the actual rate of tax payment. This phenomenon of tax on tax is called the cascading effect. The government does not want this to happen. The...
NO KRISHI KALYAN CESS ON DEBTORS AS ON 13th MAY’ 2016 (PART -2) Read more at: http://www.casansaar.com/article-submit.htmlThe enabling provisions for KRISHI KALYAN CESS (KKC) are contained in Chapter – VI of Finance Act’ 2016. As per the provisions, KKC shall be applicable at 0.5% on all taxable services and the proceeds of KKC would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers. The Cess will come into force with ...
As you are aware that the Finance Act, 2016 has increased the service tax rate to include a new cess, namely Krishi Kalyan Cess, which is applicable w.e.f. 01/06/2016. The effective rate of service tax for all new services provided after 01/06/2016 shall be as below: Service Tax ...
CENVAT CREDIT AVAILABLE VS CENVAT CREDIT TAKEN ALARMING AMENDMENT IN RULE 6(3) OF CENVAT CREDIT RULES (a) A manufacturer who manufactures two classes of goods namely:- Non exempted goods removed Exempted goods removed Or (b) a provider of output service who provides two classes of services, namely:- Non Exempted Services Exempted Services Shall follow any one of the following options applicable to him namely:- (i) pay an amount equal to 6% ...
Date : 19.03.2016 M/s. ABC LLP ( Service Provider ) M/s. XYZ Limited ( Service Recipient ) Ref: Service Tax on Works Contract and RCM Opinion Before giving opinion on the issues it will be useful to refer the questions related with this transaction. Assume ABC is LLP and XYZ Ltd is Body Corporate. ABC LLP is a sub contractor of XYZ Limited. XYZ Ltd sub contracted Works Contract work as well as Labor work also some time. Both partie...
Comments