SERVICE TAX PROPOSED TO BE LEVIED AT INVOICING IN NEW RULES

Finance ministry is planning to change the charge ability of Service tax from Cash system to accrual system. According to the new rules on 'time of supply', service tax will also be levied at the point of raising invoice. At present, service tax is charged only when the amount is received. However, it has been proposed in the new rules that it be levied when the consideration is received or when the invoice is raised, whichever is earlier. This is similar to taxation in case of goods and direct tax. The rules, approved by Finance Minister Pranab Mukherjee, would be put up for public comments very soon.