Payment both on receipt and accrual basis:

As per rule 6(1) of the Service Tax Rules, 1994, service tax is payable on service deemed to be provided as per Point of Taxation Rules, 2011. As per the Point of Taxation Rules, 2011:-

In case the invoice is issued within the prescribed period of 30 days from the date of completion of provision of service, service tax is payable on:-

(i) date of invoice or

(ii) date of payment

whichever is earlier.

However, in case the invoice is not issued within 30 days of the completion of the provision of the service, service tax is payable on:-

(i) date of completion of service or

(ii) date of payment

whichever is earlier.

Further, in case of individuals and partnership firms whose aggregate value of taxable services provided from one or more premises is Rs 50 lakh or less in the previous financial year, service tax on taxable services provided or to be provided by him up to a total of RS 50 lakh in the current financial year is payable on receipt basis. Also in case of advance, service tax is payable on receipt basis, i.e. when the consideration for the services are received. Hence, service tax is payable on both cash and accrual basis.