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Time of Supply

Separate provisions under the CGST Act have been made for determination of time of supply of goods as well as of services respectively by Sections 12 and 13. It is advisable to study them separately.

Time of Supply in case of Goods
Tax becomes payable at the time of supply, as determined in accordance with the provision of Section 12. This means the actual time of supply is not to be taken into account but, the one determined by Section 12 is deemed to be treated as time of supply. It contains General provisions, Specific provisions and Residuary provision.
General Provision: Time of supply shall be earliest of these three dates (a) Date of issue of Invoice or (b) Last date on which tax invoice shall be issued u/s. 31(1) i.e.: (c) Date of receipt of payment i.e. earlier of the following:
    (i) Where the supply involves movement of goods, tax Invoice shall be issued before or at the time of removal of goods for supply to the recipient or (i) The date on which the payment is entered in the supplier’s books or
    (ii) In other case, Tax Invoice shall be issued before or at the time of delivery of goods or making the goods available to the recipient or (ii) The date on which the payment is credited to supplier’s bank account.
    (iii) As per date Notified by the Government within its power to do so as per proviso to Section 31(1) for issuance of a tax invoice.As per date Notified by the Government within its power to do so as per proviso to Section 31(1) for issuance of a tax invoice.  
For the purposes of date of invoice and date of receipt of payment, “supply” shall be deemed to have been made to the extent it is covered by the invoice or payment.
Movement of goods covers cases where the supply in question requires the movement of goods from one place to another. Removal means dispatch and receipt of goods respectively by supplier and recipient and the tax invoice shall be prepared before or at the time of such removal.
Where payment is received in excess of the amount indicated in Tax Invoice up to ₹ 1,000/-, The Time of supply in respect of such excess shall be at the option of supplier:—
  1. The date of such excess or
  2. The date of issue of invoice in respect of such excess amount
Specific provision where tax is payable on reverse charge basis Time of supply shall be earliest of the following dates:
  1. Date of receipt of goods or
  2. Date of payment as entered in recipient’s books or date on which the payment is debited in recipient’s bank account, whichever is earlier or
  3. Date immediately following thirty days from the date of invoice or any other document, by whatever name called, in lieu thereof by the supplier.
Where the aforesaid provisions cannot determine the time of supply, it shall be date of entry in recipient’s books.
Specific Provision in case of supply of vouchers by a supplier Time of supply shall be:
  1. The date of issue of voucher, if the supply is identifiable at that point; or
  2. The date of redemption of voucher, in all other cases
Residuary Provision, where it is not possible to apply the general or/and special provisions Time of supply shall be:
  1. Date on which a periodical return is to be filed, (if it is required to be filed); or
  2. In other case, date of payment of tax.
Where the supplier receives the additional payments by way of interest, late fee or penalty for delayed payment of value of supply Time of supply shall be, the date on which such additional value is received.
Time of Supply in case of Services
Tax becomes payable at the time of supply, as determined in accordance with the provision of Section 13. This means the actual time of supply is not to be taken into account but, the one determined by Section 13 is deemed to be treated as time of supply.
General Provision: Time of supply shall be earliest of these three dates. (a) Date of invoice if the invoice is issued within the period prescribed u/s. 31(2) or date of receipt of payment, whichever is earlier or (b) Date of provision of service or date of receipt of payment, whichever is earlier; or [This will apply only if invoice is not issued within the period prescribed u/s. 31(2)] (c) Date on which the recipient shows the receipt of services in his books. (This provision will apply only where earlier provisions do not apply)
  For the purposes of clauses (a) and (b)––  
  (i) The supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment  
  (ii) The date of receipt of payment shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier  
Where payment is received in excess of the amount indicated in Tax Invoice up to ₹ 1,000/-. The Time of supply in respect of such excess shall be at the option of supplier:-

(i) The date of such excess or

(ii) The date of issue of invoice in respect of such excess amount.
       
Specific provision where tax is payable on reverse charge basis, the time of supply shall be the earlier of these dates. (a) Date of payment as entered in recipient’s books or date on which the payment is debited in recipient’s bank account, whichever is earlier; or (b) Date immediately following sixty days from date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier.
  Where the aforesaid provisions cannot determine the time of supply Time of supply shall be the date of entry in the recipient’s books.
  Where supply is by associated enterprises located outside India Time of supply shall be Date of entry in recipient’s books or the date of payment, whichever is earlier
Special Provision in case of supply of vouchers by a supplier Time of supply shall be, (a) Date of issue of voucher, if the supply is identifiable at that point; or (b) The date of redemption of voucher, in all other cases
Residuary Provision, where it is not possible to apply the general or/and special provisions Time of supply shall be (a) Date on which a periodical return is to be filed, (if it is required to be filed); or (b) In other case, date of payment of tax
Where the supplier receives the additional payments by way of interest, late fee or penalty for delayed payment of value of supply Time of supply shall be the date on which such additional value is received.
Change in rate of tax in respect of supply of goods or services
Section 14 determines the time of supply when the rate of tax changes. In such case the provisions of Sections 12 and 13 are not to be applied.
This Section takes into account two situations given below:
Where the supply is made Invoice is issued Payment is received Time of supply
Before the change in rate of tax After the change After the change Earlier of date of receipt of payment OR

Date of Issue of Invoice
After the change Before the change Date of receipt of payment
Before the change After the change Date of Issue of Invoice
After the change in rate of tax Before the change Before the change Earlier of date of receipt of payment

OR

Date of Issue of Invoice
  Before the change After the change Date of receipt of payment
  After the change Before the change Date of Issue of Invoice
The Explanation to Section 14 clarifies that ‘date of receipt of payment’ is the date on which the payment is entered in supplier’s books or the date on which the payment is credited to supplier’s bank, whichever is earlier. Moreover, Section 14 provides that if the date of credit in supplier’s bank is after 4 working days from the date of change in rate of tax, the ‘date of receipt of payment’ has to be taken as the date of credit.

Value of Taxable Supply of goods & services

  1. Supply by unrelated parties where price is sole consideration
  • Value = Price + Taxes under any other law + amount paid by recipient on behalf of the supplier not included in price + Non-Govt Subsidies linked to price + Interest for delayed payment + Incidental expenses charges charged by supplier before/at the time of supply.
  • Following discounts are excluded:
  • Before or at the time of supply and recorded in invoice.
  • After supply if discount can be co-related to an existing contract and the corresponding invoice, and ITC on such discount is reversed by recipient.
  • Expenditure incurred as a pure agent and recovered from the recipient shall be excluded from the value, if the following conditions are satisfied :
  1. The supplier acts as a pure agent of the recipient, when he makes payment to the third party on authorisation by such recipient.
  2. The payment made by the pure agent on behalf of the recipient is separately indicated in the invoice issued by the pure agent to the recipient
  3. The supplies procured by the pure agent from the third party as a pure agent of the recipient are in addition to the services he supplies on his own account.
  1. Other situations

Value to be determined in order from left to right:

Sr. No. Situation Open Market value Monetary + Non-monetary consideration Value of like kind and quality 110% of cost of production / cost of acquisition (Rule 30) Reasonable basis (Service provider can opt (5) instead of (4) (Rule 31)
    (1) (2) (3) (4) (5)
1 Price is not the sole consideration (Rule 27) ✔ ✔ ✔ ✔ ✔
2* Supply between distinct / related persons (excluding agents) (Rule 28) ✔   ✔ ✔ ✔
3* Supply through agent (Rule 29) ✔     ✔ ✔
*If goods intended for further supply as such by recipient, supplier may adopt value of 90% of price charged for supply of goods of like kind and quality by the recipient to his unrelated customer.
  1. Value in case of lottery, betting (Rule 31A)
Situation Value
Lottery when run by State government 100/112 of the face value of ticket or price as notified in Official Gazatte, whichever is higher
Lottery authorised by State Government 100/128 of the face value of ticket or price as notified in Official Gazatte, whichever is higher
Supply of actionable claim in form of chance to win in betting, gambling or horse race in race club 100% of the face value of the bet or amount paid to totaliser
  1. Value at the option of the supplier in certain situations (Rule 32)
    1. Foreign currency including money changing: [Rule 32(2)]
      1. General rule
Situation Value
Where RBI reference rate is available Selling rate / Buying rate (–) RBI Reference Rate X No. of units
RBI reference rate unavailable 1% of gross INR provided/received by supplier
Between non-INR currencies 1% of INR value of first Currency OR 1% of INR value of second Currency, whichever is lower
  1. Below option to be exercised for the whole FY if opted [Rule 32(2)(b)]:
Slab (₹) Value (₹)
Up to 1 lakh 1% OR 250, whichever is higher
More than 1 lakh and upto 10 lakh 1000 + 0.5% of amount exceeding 1 lakh
Above 10 lakh 60,000 OR 5500 + 0.1% of amount exceeding 10 lakh, whichever is lower
  1. Air travel bookings by travel agent [Rule 32(3)]
Situation Value
Domestic travel 5% of basic fare
International travel 10% of basic fare
  1. Life insurance business [Rule 32(4)]
Situation Value
Amount of investment / savings intimated to policy holder in advance Gross premium charged (-) amount allocated for investment or savings
Single premium annuity policies other than above 10% of single premium
Others 25% of premium charged in the first year and 12.5% of premium charged in subsequent years
Entire premium paid by policy holder towards risk cover in life insurance Refer other valuation rules
  1. Second hand goods dealers: [Rule 32(5)]
Situation Value
General rule — No ITC on purchases and loss to be ignored Selling price (–) Purchase price
Goods repossessed from unregistered defaulting borrower Selling price (–) purchase price of goods by defaulting borrower reduced by 5% for every full or part quarter between date of purchase and date of disposal
  1. Redeemable token, voucher, coupon, stamp

Value = Money value of the goods or services redeemable.

  1. Value of supply in case of pure agent (Rule 33)

Value = Expenditure / cost incurred by a supplier as a pure agent of the recipient of supply shall be excluded from value of supply

  1. Value where rate of exchange of currency, other than Indian rupees (Rule 34)
  1. Value for goods = applicable rate of exchange as notified by the Board under Customs Act for date of time of supply of such goods in terms of section 12 of the Act.
  2. Value for services = applicable rate of exchange determined as per generally accepted accounting principles for the date of time of supply of such services in terms of section 13 of the Act.
  1. Value where amount is inclusive of GST (Rule 35)

Tax = Value inclusive of taxes x tax rate in % / (100+ sum of tax rates in %).

 

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