Applicability of GST on Services Provided in June

Goods and Services Tax (GST) has been rolled out from July 1, and most of the services attract a higher tax slab of 18 per cent compared to around 15 per cent service tax charged earlier.

GST replaces service tax, excise, VAT and many other local levies. All goods and services are now classified under four tax slabs of 5, 12, 18 and 28 per cent. 

However, a government official clarified GST would be levied on any bill that is generated from July 1 even if the service has been consumed prior to that, provided that no advance payment was made by the consumer as per NDTV Reports.

In case billing cycle ends on June 25, invoice is generated on July 10 and payment was not made in advance. So when invoice is issued the liability is of GST because under law the date of providing of service is the date of issue of invoice.

Under existing rules, service tax is levied on the date of issue of invoice or date of making of payment, whichever is earlier. Invoice for services has to be generated within 30 days of providing the service

In case a consumer pays the bill in advance, then the rule says tax liability arises on that day.

For goods, the law states that the day an invoice is issued will be considered as the date of goods sold and tax would be charged.

Illustration 1 – Service provided before July 1st and invoice raised before July 1st
Service tax will be applicable and not GST

Illustration 2 – Service provided before July 1st and Invoice raised after July 1st (assumed invoice raised within 30days of completion of service)
GST will be applicable as stated above

Illustration 3 – Service provided after July 1st and Invoice also raised after July 1st
GST will be applicable

Note: In all the above cases if advance money is received in June then Service Tax will be applicable 

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