Clarification on applicability of Service Tax after reduction in rate

Reduction in rate of service tax is applicable with immediate effect i.e. from 24.02.2009. Consequent to the reduction of rate of service tax from 12% to 10% w.e.f. 24.02.2009, the service tax is payable at the rate applicable on the date on which service is provided or to be provided irrespective of the date of invoice. It means that if service is provided on or before 23.02.2009, service tax is payable @ 12% even though invoice is raised at a later date i.e. on or after 24.02.2009.

In case the service is of continuous nature over a period of time, the value of service is to be apportioned on a pro-rata basis and service tax is payable @ 12% on the amount for the period from 01.02.09 to 23.02.09 and @ 10% on the amount for the period from 24.02.09 to 28.02.09.