Draft Point of Taxation (for Services Provided or Received in India) Rules Notified for Public Comments
THE Government of India proposes to issue Point of Taxation (for Services Provided or Received in India) Rules, 2010 in exercise of the powers conferred under Sec. 94 (2) (hhh) of the Finance Act, 1994.
CBEC states that the purpose of these rules is to introduce clarity and certainty in the matter of levy and collection of Service Tax particularly in situations of change of rate of service tax or imposition of service tax on new services. At present there is lack of clarity as to the date from which the changed rate or a new levy of service tax become payable and tax payers as well as tax officials face uncertainty in this regard as the provisions are not explicit. Similar uncertainty prevails in regard to cases of continuous supply of services. So far these issues have been addressed by the Board through clarificatory circulars that accompany such changes. Now the Board feels that there is a need to put the regulatory frame work on a transparent, clear and durable basis and hence these rules.
The other major change proposed to be brought about through these rules is to link the payment of tax to provision of service, raising of the invoice or payment for service provided or to be provided, whichever is the earliest. Currently the payment of service tax is linked to receipt of payment for the service, which is at odds with regime in force in Central Excise and VAT laws implemented by the states. In both Central Excise and VAT, tax payment is required on accrual basis – upon manufacture and clearance of goods in the former and issue of invoice in the latter. In neither case is the tax payment linked actual receipt of payment for the goods. The GST regime is likely to follow this practice and CBEC has felt it necessary to align the service tax regime with it so that transition to GST will be smooth. The change in the point of payment of tax will also simplify accounting for the taxpayers. The proposed changes are broadly on lines of best international practices.
Consistent with the CBEC's practice of wide consultation with all stakeholders, the draft of these rules is being published on its web site for public scrutiny, comments and suggestions. The draft is also accompanied by explanatory notes for each of the clauses. The Board welcomes responses from all who wish to comment on the proposals and will give careful consideration to all suggestions and comments while finalizing the rule (whether it is a promise on paper or not will be known when the final Rules are notified).
Please send your responses at roopamkapoor@gmail.com latest by September 1, 2010. Why are the government officers using private email ids and not the government ones?