The Finance Bill, 2015, has received the assent of the Honorable President and has been notified. 1st June, 2015 is being notified as the date on which the following provisions will come into effect.
1. The rate of Service Tax is being increased from 12% to 14% (including cesses). (Notification No.14/2015-Service Tax, dated 19th May, 2015 refers)
2. Education Cess and Secondary and Higher Education Cess, shall cease to have effect post 1st June 2015
3. Please refer the table below for determining the applicability of 14% post 1st June Service
Section 66B of the Finance Act, 1994, prescribes the service tax rate. It has been amended by Section 108 of the Finance Act, 2015. The rate of Service Tax is being increased from 12% to 14% (including cesses). The increase in Service Tax rate will come into effect from 1st June, 2015. (Notification No.14/2015-Service Tax, dated 19th May, 2015 refers)
To know whether a service has been provided or agreed to be provided for a consideration and its point of taxation, three main ingredients i.e. provision of taxable service, raising of invoice and receipt of payment are important. Service provided or agreed to be provided cannot be considered as taxable service if there is no consideration. Consideration is known only if invoice is raised or payment is made. In view of Section 67A of the Finance Act, services where there is no confusion in time of provision of service, receipt of payment and raising on invoice, rate of service tax will be as applicable at the time when taxable service has been provided or agreed to be provided. However, in case of complex situations, where it is not possible to determine the time, when the taxable service has been provided or agreed to be provided, point of taxation would be determined as per Rule 4 of the Point of Taxation Rules, 2011.
Therefore, rule 4 would be applicable as under:
1. The rate of Service Tax is being increased from 12% to 14% (including cesses). (Notification No.14/2015-Service Tax, dated 19th May, 2015 refers)
2. Education Cess and Secondary and Higher Education Cess, shall cease to have effect post 1st June 2015
3. Please refer the table below for determining the applicability of 14% post 1st June Service
| Situation for a service provider and applicable to RCM as well | Rate Applicability |
| Service Provision is complete till 31.05.2015 and Invoice raised till 31.05.2015 but Payment received on or after 01.06.2015 | 12.36% |
| Service Provision is complete and Invoice raised on or after 01.06.2015 but Payment is received till 31.05.2015 – 12.36% | 12.36% |
| Service Provision completed till 31.05.2015 and Invoice raised on or after 01.06.2015 and Payment also received after 01.06.2015 | 14.00% |
| Invoice raised till 31.05.2015 in advance and some part of total consideration has been paid till 31.05.2015 but Service Provision is being done on or after 01.06.2015 -12.36% for such part payment, | 12.36% |
| for balance payment to be recd | 14.00% |
| If entire service has been provided on or after 01.06.2015 but both payment as well as invoicing has been done till 31.05.2015 | 12.36% |
To know whether a service has been provided or agreed to be provided for a consideration and its point of taxation, three main ingredients i.e. provision of taxable service, raising of invoice and receipt of payment are important. Service provided or agreed to be provided cannot be considered as taxable service if there is no consideration. Consideration is known only if invoice is raised or payment is made. In view of Section 67A of the Finance Act, services where there is no confusion in time of provision of service, receipt of payment and raising on invoice, rate of service tax will be as applicable at the time when taxable service has been provided or agreed to be provided. However, in case of complex situations, where it is not possible to determine the time, when the taxable service has been provided or agreed to be provided, point of taxation would be determined as per Rule 4 of the Point of Taxation Rules, 2011.
Therefore, rule 4 would be applicable as under:
| Sr.No. | Service Provided | Invoice w.r.t. rate change | Payment w.r.t. rate change | Point of Taxation Rule | Rate of service Tax |
| 1 | Before rate change | After | After | 4(a)(i) | 14% |
| 2 | -do- | Before | After | 4(a)(ii) | 12.36% |
| 3 | -do- | After | Before | 4(a)(iii) | 12.36% |
| 4 | After rate change | Before | After | 4(b)(i) | 14% |
| 5 | -do- | Before | Before | 4(b)(ii) | 12.36% |
| 6 | -do- | After | Before | 4(b)(iii) | 14% |
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