The government has issued transitional rules to address the taxation of services billed before the implementation of the Goods and Services Tax (GST). These rules provide clarity for businesses and service providers who had issued invoices or received payments before July 1, 2017, but where the actual supply of service occurred after the GST rollout. The objective is to prevent double taxation and ensure smooth credit transfer under the unified tax system.

According to the transition provisions, Service Tax paid on advances or invoices issued before GST will not be taxed again under the new regime, provided proper documentation and records are maintained. The rules allow taxpayers to claim input credit for taxes paid under the old system, subject to conditions such as filing required returns, declaring closing balances, and aligning them with GST filings. For services rendered across both regimes, apportionment guidelines have been defined to split tax liability fairly.

Industry stakeholders welcomed the clarity, noting that it eases compliance for sectors like construction, consultancy, and long-term contracts, where billing and service delivery often span multiple months. The transitional framework is seen as an essential measure to protect businesses from overlapping tax burdens and audit disputes. These rules serve as a bridge between the Service Tax regime and GST, helping establish a legally consistent and operationally fair migration process.