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.
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Time of Supply in case of Goods
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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: |
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(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 |
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(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 |
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(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 |
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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.
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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 dispatch by the supplier.
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In Pasco Motor LLP (AAR-Haryana) it was ruled that in cases where the goods are delivered by the applicant later on but the invoice is raised earlier, the date of issue of invoice will be the time of supply for the purposes of determining the tax period for filing return and payment of tax for such supplies.
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Where payment up to
₹ 1,000/- is received in excess of the amount indicated in Tax Invoice |
The Time of supply in respect of such excess shall be at the option of supplier:—
(i) The date of receipt of such excess amount or
(ii) The date of issue of invoice in respect of such excess amount
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Specific provision where tax is payable on reverse charge basis by the recipient of goods |
Time of supply shall be earliest of the following dates:
(a) Date of receipt of goods or
(b) 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
(c) Date immediately following thirty days from the date of invoice or any other document, by whatever name called, in lieu thereof by the supplier.
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Where it is not possible to determine the time of supply as per the aforesaid provisions, it shall be date of entry in the recipient's books.
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Specific Provision in case of supply of vouchers by a supplier |
Time of supply shall be:
(a) The 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
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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, the date on which tax is paid.
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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.
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Time of Supply in case of Services
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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 of services. |
General Provision: Time of supply shall be earliest of the following 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 |
(b) Date of provision of service or date of receipt of payment, whichever is earlier; [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 provisions of clauses (a) and (b) do not apply) |
For the purposes of clauses (a) and (b)-- |
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(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 |
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(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 |
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In Siemens Ltd. [2019] 76 GST 321 (AAR-West Bengal) it was ruled that where mobilisation advance received by supplier for works contract service remained unadjusted as on 01.07.2017, supplier is deemed to have supplied the service on 01.07.2017 and GST is leviable thereon. In appeal, the said view was upheld by the AAAR-West Bengal.
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Where payment up to ₹ 1,000/- is received in excess of the amount indicated in Tax Invoice |
The Time of supply in respect of such excess shall be at the option of supplier:-
(i) The date of receipt of such excess amount or
(ii) The date of issue of invoice in respect of such excess amount. |
Specific provision where tax is payable on reverse charge basis by the recipient of services |
Time of supply shall be earliest of the following 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 the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier. |
Where it is not possible to determine the time of supply as per the aforesaid provisions, it shall be date of entry in the recipient's books. |
Where supply is by an associated enterprise located outside India, time of supply shall be the date of entry in the 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, the date on which tax is paid. |
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. |
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Change in rate of tax in respect of supply of goods or services
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Section 14 determines the time of supply of goods and/or services where there is a change in the rate of tax. In such cases the provisions of Sections 12 and 13 are not to be applied. |
This section takes into account six situations as stated hereunder: |
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 issue of invoice or date of receipt of payment |
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 issue of invoice or date of receipt of payment |
Before the change |
After the change |
Date of receipt of payment |
After the change |
Before the change |
Date of issue of invoice |
"Date of receipt of payment" is the date on which the payment is entered in the supplier's books or the date on which the payment is credited to supplier's bank account, whichever is earlier. Moreover, if the date of credit in supplier's bank account 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 in the bank account. |
Value of Taxable Supply of goods & services: Section 15
1. Supply by unrelated parties where price is sole consideration
♦ Value = Price + Taxes, duties, cesses, etc. under any other law + amount paid by recipient on behalf of the supplier not included in the price + Non-Govt. subsidies directly linked to the price + Interest or penalty charged by supplier for delayed payment of consideration + Incidental expenses & charges charged by supplier and any amount charged by supplier for anything done in respect of the goods and/or services at the time of, or before the delivery of goods or supply of services.
♦ Following discounts are excluded:
- Discount given before or at the time of supply and recorded in the invoice.
- Discount given after supply if the same is established in terms of an existing agreement and specifically linked to relevant invoices, and ITC attributable to such discount is reversed by recipient.
♦ Expenditure incurred by the supplier of services as a pure agent and recovered from the recipient shall be excluded from the value, if the following conditions are cumulatively satisfied: [Rule 33]
(i) The supplier acts as a pure agent of the recipient, when he makes payment to the third party on authorisation by such recipient;
(ii) 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 of service; and
(iii) 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.
♦ In Ultratech Cement Ltd. [2018] 69 GST 188 (AAR-Maharashtra) it was ruled that the amount paid to authorised dealers on account of rate difference after supplying goods to authorised dealers & stockists (i.e., post-sale discount) cannot be considered for determining transaction value as the same does not comply with the conditions of discount enumerated u/s 15(3)(b) of the CGST Act.
♦ In Arivu Educational Consultants Pvt. Ltd. [2020] 32 GSTL 353 (AAR-Karnataka) it was ruled that where the applicant providing coaching, learning and training services collected certain amount as examination fee from students and remitted the same to the respective college or university without any profit element, activity of collecting examination fee is a service as a pure agent.
♦ In Santhosh Distributors [2020] 32 GSTL 105 (AAR-Kerala) it was ruled that the reimbursement of discount/rebate by the principal company to its distributor in lieu of supply of goods by the distributor at a discounted rate based on the principal's pre-fixed rate scheme was liable to be added to the consideration payable by customer to the distributor to arrive at the value of supply u/s 15 at the hands of the distributor.
♦ In Navodit Agarwal [2019] 73 GST 636 (AAR-Chhattisgarh) it was ruled that the cost of diesel provided by the service recipient for transportation of his cement/clinker was liable to be added to the freight amount charged by the supplier of service.
♦ In Lear Automotive India Pvt. Ltd. [2019] 21 GSTL 204 (AAR-Maharashtra) and Nash Industries (I) Pvt. Ltd. [2019] 23 GSTL 367 (AAAR-Karnataka) it was ruled that cost of tools/amortised value of tools received free of charge from customer shall not be includible in the value of goods manufactured and supplied by the applicant to customer.
♦ Also refer to:
- CBIC Circular No. 92/11/2019-GST dated 07-03-2019 regarding clarification on treatment of sales promotion schemes under GST.
- CBIC Circular No. 102/21/2019-GST dated 28-06-2019 on clarification regarding applicability of additional/penal interest.
- CBIC Circular No. 105/24/2019-GST dated 28-06-2019 regarding clarification related to treatment of secondary or post-sales discounts. (This circular has been withdrawn ab-initio vide Circular No. 112/31/2019-GST dated 03-10-2019.)
- Corrigendum to CBIC Circular No. 76/50/2018-GST dated 07-03-2019 regarding exclusion of TCS under Income Tax Act, 1961 for the purposes of determination of value of supply.
2. Other situations
Value to be determined in order, from left to right:
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Sr. No. |
Situation |
Open Market value |
Monetary + Non-monetary consideration |
Value of like kind and quality |
110% of cost of production/acquisition/provision (Rule 30) |
Reasonable basis (Rule 31) (Service provider can opt for this rule ignoring Rule 30) |
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(1) |
(2) |
(3) |
(4) |
(5) |
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1 |
Price is not the sole consideration (Rule 27) |
✓ |
✓ |
✓ |
✓ |
✓ |
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2* |
Supply between distinct/related persons (excluding agents) (Rule 28)# |
✓ |
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✓ |
✓ |
✓ |
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3* |
Supply through agent (Rule 29) |
✓ |
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✓ |
✓ |
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* For Rules 28 & 29: If goods are 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.
# For Rule 28: Where the recipient is eligible for full ITC, the value declared in the invoice shall be deemed to be the open market value.
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In Specsmakers Opticians (P.) Ltd. [2020] 32 GSTL 751 (AAAR-Tamil Nadu) it was ruled that where goods are supplied to distinct person, i.e., branches outside the State and recipient is eligible for full ITC, second proviso to rule 28 provides that value declared in invoice to be 'open market value' for such transaction. |
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In GKB Lens Pvt. Ltd. [2018] 13 GSTL 343 (AAR-West Bengal) it was ruled that goods transferred from the head office to branches in other States can be valued in terms of cost price under second proviso to rule 28, instead of 90 per cent of MRP as required under first proviso of the said rule. |
3. Value in case of lottery, betting, gambling and horse racing (Rule 31A)
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Situation |
Value |
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Supply of lottery1 |
100/128 of the face value of ticket or of the price as notified in Official Gazette by the Organising State, whichever is higher. |
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Supply of actionable claim in the form of chance to win in betting, gambling or horse racing in a race club |
100% of the face value of the bet or amount paid into the totalisator. |
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1 Entry relating to valuation of lottery substituted by CGST (Second Amendment) Rules, 2020 w.r.e.f. 01-03-2020. Vide this amendment, the differentiation between "lottery run by State Government" and "lottery authorised by State Government" has been done away with.
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4. Value at the option of the supplier in certain situations (Rule 32)
a. Foreign currency including money changing: [Rule 32(2)]
i. General rule [Rule 32(2)(a)]
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Situation |
Value |
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Where one of the currencies is INR and RBI reference rate is available |
Selling rate or Buying rate (-) RBI Reference Rate x No. of units of currency |
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RBI reference rate unavailable |
1% of gross INR provided/received by the supplier |
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Between non-INR currencies |
1% of INR value of first currency or 1% of INR value of second currency, whichever is lower |
ii. Below option to be exercised for the whole FY if opted [Rule 32(2)(b)]:
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Gross amount of currency exchanged (₹) |
Value (₹) |
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Up to 1 lakh |
1% or ₹ 250, whichever is higher |
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More than 1 lakh and up to 10 lakh |
₹ 1,000 + 0.5% of amount exceeding 1 lakh |
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Above 10 lakh |
₹ 60,000 OR ₹ 5,500 + 0.1% of amount exceeding 10 lakh, whichever is lower |
b. Air travel bookings by travel agent [Rule 32(3)]
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Situation |
Value |
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Domestic travel |
5% of basic fare |
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International travel |
10% of basic fare |
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"Basic fare" means that part of the air fare on which commission is normally paid to the air travel agent by the airlines. |
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c. Life insurance business [Rule 32(4)]
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Situation |
Value |
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Amount of investment/savings intimated to policy holder at the time of supply of service |
Gross premium charged (-) amount allocated for investment or savings on behalf of the policy holder |
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Situation |
Value |
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Single premium annuity policies other than above |
10% of single premium |
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Others |
25% of premium charged in the first year and 12.5% of premium charged in subsequent years |
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Entire premium paid by policy holder is towards risk cover in life insurance |
Refer other valuation rules (This sub-rule does not apply) |
d. Second hand goods dealers: [Rule 32(5)]
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Situation |
Value |
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General rule — No ITC on purchases and loss to be ignored |
Selling price (-) Purchase price |
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Goods repossessed for recovery of loan/debt 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 by the person making repossession |
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"Second hand goods" = Used goods sold as such or after such minor processing which does not change the nature of the goods and where no ITC is availed on the purchase of such goods. |
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In Shambhu Traders (P.) Ltd. [2019] 73 GST 245 (AAR-Rajasthan) it was ruled that rule 32(5) of the CGST Rules, 2017 which provides for margin scheme in case of intra-State supplies shall also be applicable to inter-State supplies. |
e. Redeemable token, voucher, coupon, stamp (other than postage stamp): [Rule 32(6)]
Value = Money value of the goods or services redeemable against such token, etc.
5. Value of supply in cases where Kerala Flood Cess is applicable (Rule 32A)
Value for levying Kerala Flood Cess = Value determined in terms of 15 excluding such cess.
6. Value of supply of services in case of pure agent (Rule 33)
♦ Expenditure/cost incurred by a supplier as a pure agent of the recipient of supply shall be excluded from value of supply subject to certain conditions (already covered above).
♦ "Pure agent" means a person who -
(a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply;
(b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as a pure agent;
(c) does not use the procured goods or services for his own use;
(d) receives only actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account;
7. Rate of exchange of currency, other than INR, for determination of value (Rule 34)
(i) For determination of value of goods = Applicable rate of exchange as notified by the Board under Customs Act, 1962 for date of time of supply of such goods in terms of section 12 of the CGST Act.
(ii) For determination of value of 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 CGST Act.
8. 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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