Place of Provision of Service Rules 2012 help in determining the place from where the Service shall be deemed to be provided and the chargeability of Service Tax on such Services shall be decided accordingly.
The Place of Provision of Service Rules 2012 replaces the “Export of Service Rules 2005” and “Taxation of Services (provided from outside India and received in India) Rules 2006. Both these previous rules indirectly handled the concept of Place of Provision of Service confining itself to define the circumstances in which a provision of service would constitute import or export.
Steps to be followed while applying Place of Provision of Service Rules 2012
For determining the taxability of a service, the following questions are required to be asked sequentially:-
- Which rule applies to the Service Provider specifically? In case more than 1 rule applies equally, which one of these comes later in the order given in the rules?
- What is the place of Provision of Service in Terms of the above Rule?
- Is the Place of Provision in the taxable territory? If yes, Tax will be payable. If No, Tax will not be payable.
- Is the provider “located” in the taxable territory? If yes, he will pay tax.
- If not, is the service receiver located in the taxable territory? If yes, he may be liable to pay tax on reverse charge basis.
- Is the Service Receiver an Individual or Govt. receiving Services for a Non-Business purpose, or a charity receiving services for a charitable activity? If yes, is the same is exempted.
- If not, he is liable to pay tax.
General Rule for Place of Provision of Service
The place of provision of a Service shall be the location of the recipient of Service. Provided that in case the location of the Service Receiver is not available in the ordinary course of business, the place of provision shall be the location of the Service Provider.
Place of Provision of Performance Based Services
The place of provision of following services shall be the location where the services are actually performed, namely:-
a. Services provided in respect of Goods that are required to be made physically available by the Recipient of Service to the Provider of Service, or to a person acting on behalf of the provider of Service, in order to provide the Service.
Provided that when such services are provided from a Remote Location by way of Electronic means the place of provision shall be the location where the goods are situated at the time of provision of Service.
Provided further that this sub-rule shall not apply in case of services provided in respect of goods that are temporarily imported into India for Repairs, Reconditioning or Re-engineering for Export, subject to conditions as may be specified in this regard.
Services provided to an Individual, represented either as the Recipient of Service or a person acting on behalf of the Recipient which require the physical presence of the Receiver or the person acting on behalf of the receiver, with the provider for the provision of service.
Place of Provision of Services relating to Immovable Property
The Place of Provision of Services provided directly in relation to an Immovable Property, including Services provided in this regard by experts and estate agents, provision of hotel accommodation by a hotel inn, guest house, club or campsite by whatever name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including architects or interior decorators shall be the place where the immovable property has been located or intended to be located.
Place of Provision of Service relating to Events
The place of provision of services provided by way of admission to, or organisation 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, shall be the place where the event is actually held.
Place of Provision of Services provided at more than 1 Location
Where any Service mentioned above is provided at more than 1 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.
Place of Provision of Service where Provider and Recipient are located in the Taxable territory
Place of Provision of a Service, where the location of the provider of service as well as that of the recipient of service is in the taxable territory, shall be the location of the recipient of service.
Place of Provision of Specified Services
The place of Provision of the following services shall be the location of the Service Provider:-
- Services provided by a Banking Company, or a Financial Institution, or a Non-Banking Financial Company to Account Holders
- Online Information and Database Access or Retrieval Services
- Intermediary Services
- Services consisting of hiring of means of Transport, upto a period of 1 Month
Place of Provision of Goods Transportation Service
The place of provision of services of Transportation of Goods, other than by way of Mail or Courier, shall be the place of destination of the Goods
Provided that the place of provision of Services of Goods Transportation Agency shall be the location of the person liable to tax.
Place of Provision of Passenger Transportation Service
The place of provision in respect of a passenger transportation service shall be the place where the passenger embarks on the conveyance for a continuous journey.
Place of Provision of Services provided on Board a Conveyance
Place of Provision of Services provided on Board a Conveyance during the course of a Passenger Transport Operation, including services intended to be wholly or substantially consumed while on board, shall be the first scheduled point of departure of that conveyance for the journey.