Introduction on Point of Taxation :
Point of taxation means the point in time when a service shall be deemed to have been provided. Point of Taxation Rules, 2011 determine the point of taxation.
As per these rules, point of taxation is –
- the time when the invoice for the service provided or agreed to be provided is issued;
- if invoice is not issued within prescribed time period (30 days except for specified financial sector where it is 45 days) of completion of provision of service, then the date of completion of service;
- the date of receipt of payment where payment is received before issuance of invoice or completion of service.
Therefore, liability to pay service tax will arise on issuance of invoice or date of completion of service if invoice is not issued within prescribed period of completion or on receipt of payment , whichever is earlier.