POT in GST
By: – CA Akash Phophalia
Goods and Services Tax – GST
Dated:- 9-9-2015
Introduction
Prior to 01.04.2011 service tax was deposited to the credit of Government in the month following the month in which payment was received. In other words service tax was payable on receipt basis. Thereafter, in 2011 in order to achieve a closer fit between the present service tax regime and its predecessor GST regime a need of shift from cash basis to accrual basis was felt and the same was implemented.
Existing Provision under Service Tax
In the present law the point of taxation depends upon the three factors viz. date of completion of service, date of payment of service tax and the date of issue of invoice.
* General Rule including continuous supply of services
Situation
Point of Taxation
Advances received
Date of receipt of such advance
Invoice issued within stipulated period, and –
* No payment is received before issue of invoice
Payment is received before th
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en point of taxation shall be the date immediately following the said period of three months.
Point of taxation for Associated Enterprises – In case of associated enterprises where the person providing the service is located outside India, the point of taxation shall be the date of debit in the books of accounts of the service receiver or the date of payment, whichever is earlier.
Special provision for Individuals/partnership firms/LLP – Where aggregate value of taxable service provided by the individuals and partnership firms from one or more premises is ₹ 50 lakhs or less in the previous financial year, the service provider has the option to pay service tax on cash basis on the taxable services upto the total of ₹ 50 lakhs in the current financial year
Point of taxation in case of change in effective rate of tax –
Date of completion of service
Date of issue of Invoice
Date of Payment
Point of taxation
Before
Before
After
Date of issue of Invoice
Before
Aft
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n “supply of goods” and “supply of services”. Therefore, the point of taxation in post-GST regime will lie on the basis of supply of goods and supply of services. However, this article is emphasizing the point of taxation on the overlapping transactions to provide harmony in pre-GST and post-GST regime.
Overlapping transactions
It is proposed to consider only two factors for identifying the point of taxation in post-GST regime – Completion of service, and Issue of Invoice. The taxability will be expected to be determined as under (service is taxable in both pre-GST and post-GST regime):-
Completion of Service
Raising of Invoice
Point of Taxation
Pre-GST
Pre-GST
Pre-GST
Post-GST
Pre-GST
Post-GST
Pre-GST
Post-GST
Post-GST
In case the service is not taxable in pre-GST regime and taxable in Post-GST regime or vice-versa, the possible point of taxation event is the completion of provision of service irrespective of the date of issue of invoice or date of payment.
In case of
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