Login
Email Or User Name
Password
Invalid Login details Forgot your password?


Place of Provision of Service Rules,2012

PLACE OF PROVISION OF SERVICE RULES, 2012

 

CONTENTS

PLACE OF PROVISION OF SERVICE RULES, 2012. 1

Rule 4 - Specified performance based services. 2

Rule 5 - Services relating to immovable property. 3

Rule 6 - Services relating to events. 3

Rule 7 - Services covered by Rules 4,5 or 6 of the PoPSR provided at more than one location. 3

Rule 8 - Where the provider and recipient of service are located in taxable territory. 3

Rule 9 - Certain specified services. 4

Rule 10 - Goods transportation services other than service by mail or courier. 4

Rule 11 - Passenger transportation service. 4

Rule 12 - Service provided on board a conveyance. 4

Rule 14 - Order of Application of Rules. 4

 

 

PLACE OF PROVISION OF SERVICES

Section 66C:

(1) The Central Government may, having regard to the nature and description of various services, by rules made in this regard, determine the place where such services are provided or deemed to have been provided or agreed to be provided or deemed to have been agreed to be provided.

(2) Any rule made under sub-section (1) shall not be invalid merely on the ground that either the service provider or the service receiver or both are located at a place being outside the taxable territory.

Notification no. 28/2012-ST dated 20/06/2012 determines

  Place where services are provided

  Place where services are agreed to be provided

  Place where services are deemed to be provided

  Place where services are deemed to have been agreed to be provided

  Place of Provision of Service Rules, 2012 determine the place where services shall be deemed to be provided.

  Taxability is determined based on the location of its provision

  Place of Provision of Service Rules, 2012 contain 14 rules and shall be in operation w.e.f.1-7-2012.These rules pertain to the following:

  Rule 1- Title, extent and commencement

  Rule 2- Definitions

  Rule 3-Main/Default rule

-       Service deemed to be provided where the receiver is located

-       Receiver's location will determine whether service is leviable to tax in the taxable territory.

-       It is the provider of service who is normally liable to pay the tax except where he is stationed outside the taxable territory and the place of provision is in the taxable territory.

-       However, if the provider of service is stationed outside the taxable territory, it is the receiver of service in the taxable territory who will be liable.

-       This is illustrated as follows:

 

 

Taxable territory Non- taxable territory

ABC

Service Provider

 

 

 

DEF

Service Receiver

 
 


 


Text Box: XYZ
Service Provider
Text Box: PQR
Service Receiver

 

 

 

  A company ABC provides a service to a receiver PQR, both located in the taxable territory. Since the location of the receiver is in the taxable territory, the service is taxable. Service tax liability will be discharged by ABC, being the service provider and located in the taxable territory.

  However, if ABC were to supply the same service to a recipient DEF located in non-taxable territory, the provision of such service is not taxable, since the service receiver is located outside the taxable territory.

  If the same service were to be provided to PQR(located in taxable territory) by an overseas provider XYZ(located in non-taxable territory), the service would be taxable, since the recipient is located in a non-taxable territory, the tax liability would be discharged by the receiver, under the reverse charge principle(also referred to as "tax shift").

 

  The main rule is applied when none of the other later rules apply [Point 5.3.1 of the text of Education Guide issued by the CBEC]

  The principal effect of the Main Rule is that:-

 

A. Where the location of receiver of a service is in the taxable territory, such service will be deemed to be provided in the taxable territory and service tax will be payable.

 

B. However if the receiver is located outside the taxable territory, no service tax will be payable on the said service.

 

The applicability of the PoPSR, 2012 is tabulated below:

[Refer Guidance Note 5 of the Education Guide issued by the CBEC]

Rules

Summary of the Rule

Examples of the Services Covered

Place of Provision of Service

Rule 4 - Specified performance based services

Covers services provided in respect of:

 

 

Place where the services are actually performed

1.    goods that are required to be made physically available to the provider of service or his agent by the recipient of service

 

2.    services requiring physical presence of the receiver of service, being an individual or his agent,

 

3.    services provided electronically in respect of goods from a remote location [proviso to sub-rule (1)]

 

But does not cover services in respect of goods that are temporarily imported in India for repairs, reconditioning or reengineering for re-export subject to conditions to be specified.

 

Rule 5 - Services relating to immovable property

Covers services provided directly in relation to immovable property including:

 

 

Place where the immovable property is situated or intended to be located.

a)    The service consists of lease, or a right of use, occupation, enjoyment or exploitation of an immovable property;

oil/gas/mineral exploration or exploitation relating to specific sites of land or the seabed

b)    the service is physically performed or agreed to be performed on an immovable property or property to come into existence;

Maintenance or Construction activities

c)     the direct object of the service is the immovable property in the sense that the service enhances the value of the property, affects the nature of the property, relates to preparing the property for development or redevelopment or the environment within the limits of the property

 

engineering, architectural services, surveying and sub-dividing, management services, security services etc

d)    the purpose of the service is:

              i.        the transfer or conveyance of the property or the proposed transfer or conveyance of the property;

             ii.        the determination of the title to the property.

real estate services in relation to the actual or proposed acquisition, lease or rental of property, legal services rendered to the owner or potential owner

 

Rule 6 - Services relating to events

Covers services relating to admission to or organization of a cultural, artistic, sporting, scientific, educational or entertainment event or a celebration, conference, fair, exhibition or similar events and of services ancillary to such admission.

organization of events such as conventions,

conferences, exhibitions, fair, seminars, workshops, weddings, sports and cultural

Place where the event is actually held.

Rule 7 - Services covered by Rules 4,5 or 6 of the PoPSR provided at more than one location

Where any service stated in rules 4, 5, or 6 is provided at more than one location, including a location in the taxable territory, its place of provision shall be the location in the taxable territory where the greatest proportion of the service is provided.

--

The taxable territory where the greatest proportion of the service is provided

Rule 8 - Where the provider and recipient of service are located in taxable territory

This Rule covers situations where the POPS provided in a taxable territory may be determinable to be outside the taxable territory by applying one of the earlier Rules i.e. Rule 4 to 6 but the SP & SR are located in the taxable territory

--

Location of the recipient of service

Rule 9 - Certain specified services

Following are the specified services covered under this Rule:

--

Location of the service provider

1.    services by a banking company or a financial institution or a NBFC to account holders

i) opening and operation of bank

ii) transfer of money

2.    online information and database access or retrieval services,

i) web-based services providing trade statistics, legal and

financial data, matrimonial services, social networking sites

ii) digitized content of books, online news, flight information and weather reports

3.    intermediary services and

i) the supply between the principal and the third party; and

ii) the supply of his own service (agency service) to his principal, for which a fee or commission is usually charged.

4.    service consisting of hiring of means of transport up to one month.

--

 

Rule 10 - Goods transportation services other than service by mail or courier

N.A.

--

In case of GTA: Location of the person liable to tax

 

In case of Others:

Destination of goods

Rule 11 - Passenger transportation service

A "continuous journey" means a journey for which:-

(i) a single ticket has been issued for the entire journey; or

(ii) more than one ticket or invoice has been issued for the journey, by one service provider, or by an agent on behalf of more than one service providers, at the same time, and there is no scheduled stopover in the journey

--

Place where the passenger embarks on the conveyance for a continuous journey

Rule 12 - Service provided on board a conveyance

Covers all services on board a passenger transport conveyance

(aircraft, vessel, rail, or roadways bus)

 

on-board service of movies/music/video/ software games on demand, beauty treatment etc, albeit only when provided against a specific charge, and not supplied as part of the fare

First scheduled point of departure of that conveyance for the journey

Rule 14 - Order of Application of Rules

Where the provision of a service is, prima facie, determinable in terms of more than one rule

--

In accordance with the rule that occurs latter among the rules that merit equal consideration