Applicability of new rate of Service
tax from June 1st – an illustration
The rate of service tax has been
increased to 14% with effect from 1st June, 2015. The table below
gives a bird’s eye view of the applicability of new rate when the service in
different scenarios.
For example, you might have provided the service before the new rate
coming into force, but you have issued the invoice in June and you got the payment against that invoice
in June, then even though you have provided the service while the old rate was applicable,
you will be forced to pay tax at new rate, irrespective of whether you could
recover the increased service tax from your client or not.
The table given below gives a
full picture of point of taxation as per The Point of Taxation Rules, 2011, in
case of rate change:
|
Service provided
|
Invoice Issued
|
Payment received
|
Rate of Tax
|
|
Before June 1st
|
In June or after
|
In June or after
|
14%
|
|
Before June 1st
|
Before June 1st
|
In June or after
|
12.36%
|
|
Before June 1st
|
In June or after
|
Before June 1st
|
12.36%
|
|
In June or after
|
Before June 1st
|
In June or after
|
14%
|
|
In June or after
|
Before June 1st
|
Before June 1st
|
12.36%
|
|
In June or after
|
In June or after
|
Before June 1st
|
14%
|
