Aug. 6 – As part of India’s new Goods and Services Tax (GST), India is considering switching to a time of supply system that will allow service tax to be levied at the point of raising invoice instead of when the amount is received.
“There will be a change from cash system to accrual system. This is similar to taxation in case of goods and direct tax,” a finance ministry official told Business Standard. The new rules are pending release and will be available for public commentary soon. This will make it easier to compute taxes for management services, equipment leasing, and hiring staff because it allows a new tax rate to be levied when the service amount changes.
India is also considering place of supply system for levying service tax based international examples.“We are studying international practices. We have to see if the place of supply rules are actually required before GST is introduced,” said the official.
The proposed GST in India has been met with resistance by opposition party ruled states and risks being delayed again. Some states also oppose rules that give the Union Minister power over state GST.
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