Today we discuss on the Place of Provision of Service Rules 2014 It will determine at where and under which hands service will be taxable.
It will decide service is taxable in the hands of service receiver or service provider, also place of provision of service tax rule will help to determine the particular service is an export of service or import of service.
Benefits of Place of Provision of Service Rules 2014
Place of Provision of Service Rules 2014 will be helpful in following manner –
To determine whether a service is export service or import service.
To determine the taxability of service whether taxable in the hands of service provider or service receiver.
To determine taxable service is come under which jurisdiction.
Rule 3 of place of provision of service 2014
If service not covered under any other rules given below service tax is taxable in the hands of service receiver. Where the location of service receiver is not available in the ordinary course of business service is taxable in hands of service provider.
Rule 4 – Performance based service
In case of performance based service tax the place of provision of service will be the location where the service has been performed.
Service provided in respect of goods that are required to be physically provided by the service receiver to service provider. In this rule actual place of service performed will determine the place of provision of service.
Exception in case of online service provided from remote location the place of provision will be the place where the goods are located at the time of service provided.
Service provided to a person where service receiver should be physically present with the service provider example repairs and maintenance, warehousing etc.
Rule 5 – Service related to immovable property
Place of provision of service in relation to immovable property will be the place where the immovable property is located. Like architect and interior decorator service
Service provided in relation to use of immovable property is also covered under that rule like renting of hotel accommodation, guest house, Club etc.
Rule 6 – Service related to the Events
Place of provision of service in relation to Events will be the place where the Events is actually held.
Any service provided in relation to admission or organisation of an event or ancillary service to the admission of an event will be covered under that Rule 5.
Service provided in an event like hiring of equipment (tent, decoration etc.) catering service will be covered under this rule.
Events mean Cultural, scientific, sports, educational, fair, exhibition, conference etc.
Rule 7 – services provided at more than one location
Where service provided in relation to Rule 4, 5, or 6 (Performance, immovable property, Events) at more than one location and one location is come under taxable territory while other is covered under exempted territory. In that case service provided at all place (taxable and non-taxable territory) will be taxable.
Place of provision of the service will be the place where the highest portion of service provided.
Situation 1 – Event held in Jammu and Kashmir (100%) – As per Rule 5 Service tax is not taxable as Jammu and Kashmir will come under non-taxable territory and event is held in Jammu and Kashmir.
Situation 2– Event held in Jammu and Kashmir (50%), Maharashtra (30%) and Rajasthan (20%).
As per Rule 7 entire service provided in all the state will be taxable at Maharashtra.
Rule 8 – When both the service receiver and provider are in taxable territory
Place of provision of the service will be the location of service receiver. Except the service covered under Rule 9 to 12 below.
Rule 9 – Place of provision of some specified services
(a) Services provided by a banking company, financial institution, or NBFC to its account holders;
(b) Online information and database access services;
(c) Intermediary services;
(d) Service consisting of hiring of means of transport, upto a period of one month.
Place of provision of the service will be the place of service provider.
Click here to know more on taxability of Intermediary services
Rule 10 Service related to goods transportation services
Place of provision of service in relation to goods transport other than courier and mail will be the place where the goods are delivered.
In case of applicability of reverse charge mechanism in GTA service
Place of provision of service will be the place of service provider or service receiver who will be liable to pay freight.
Rule 11 Passenger transportation service
Place of provision of service in relation to passenger transportation service will be the place where the passenger embarks.
Rule 14 – How place of provision rules apply
As per Rule 14 of Place of Provision of Service the later rule prevails over earlier rule. All the rule will be applied in reverse order. Rules in respect of specific services will prevail over other rules.