Service Tax - Clarification on Point of Taxation Rules - Height of Confusion?
PLEASE read Board's Circular No. 162 - Service Tax dated 06.07.2012. If you are confused, please read our article Negative Blues-IX: Composition scheme for ongoing contracts. The Board now clarifies,
1. Is it a change in effective rate of tax? - works contracts earlier paying service tax @ 4.8% under Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 and now required to pay service tax @12% on 40% of the total amount charged, keeping the effective rate again at 4.8%. NO; as only the manner of expression has been altered.
2. The point of taxation for services provided in respect of taxable works contracts in progress on 01.07.2012 would need to be determined under rule 4 of the Point of Taxation Rules unless there is no change in effective rate of tax. (Can there be a more complicated expression? Why are they trying to confuse the assessees?)
3. The provisions of partial reverse charge would also be applicable in respect of such services where point of taxation is on or after 01.07.2012 under the applicable rule in respect of the service provider.
Circular No. , Dated: July 06, 2012