April 2011
Point of Taxation (Amendment) Rules, 2011 and other amendments – Notification Nos. 22 / 2011 to 27/2011 – Service Tax all dated 31st March, 2011
By Taeun Ghia, Brijesh Cholera, Pratik Mehta, Hardik Shah, Chartered Accountants
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The Rules relating to Service Tax have been further amended with effect from 01st April 2011 through a series of notifications issued on 31st March 2011. Some of these amendments are in response to representations in respect of the relevant proposals in the Finance Bill, 2011. The salient features of these amendments are as follows;
• Amendments have been brought about in the manner of valuation and composition scheme for services in relation to sale of foreign currencies. These amendments are effective from 1st April 2011.
• Substantial changes were made in the CENVAT Credit Rules, 2004. Further amendments are proposed to permit the claim of credit on the basis of invoices rather than on the basis of payments. These amendments are effective from 1st April 2011.
• Substantial changes are made in the Point of Taxation Rules. 2011. While in general, the point of taxation has been shifted to the earliest of invoicing or receipt of advance, in the following cases, the receipt basis for payment of tax is being continued: a. Services rendered by specified professionals (CAs, CWAs, CSs, Interior Decorators, Advocates, Architects, Scientific Testing, etc.) b. Services subjected to reverse charge mechanism (subject to condition of receipt of payment within specified period) c. Export of Services (subject to condition of receipt of payment in specified period)
• It is further provided that the new rules will not apply in cases where the services are rendered prior to 31.03.2011. Further, an assessee can opt to defer the applicability of the new rules to 01.07.2011. An option is granted to discharge the service tax on receipt basis upto 30. 06. 2011.
• An adjustment is provided for deficiency of service but no adjustment is provided on account of bad debts.
• CENVAT Credit on input services can be availed on the basis of supplementary invoices. This amendment is effective from 01.04.2011. For details visit: http://www.servicetax.gov.in/stnotfns- home.htm
