March 28, 2022
Time of supply denotes the point in time when goods/services are regarded supplied’. As the seller knows the ‘time’, it enables him to identify the due date for tax payment.
CGST/SGST or IGST has to be paid at the time of supply. Goods and services have a separate basis to identify their supply time.
Time of supply of goods will be the earliest of the following:
For instance:
Mr. Ramu sold goods to Mr. Ramesh worth Rs 2,00,000. The invoice was issued on 15th February. The payment was received on 31st February. The goods were supplied on 20th February.
It is to be noted that the GST is not applicable to advances under GST. GST in Advance is payable at the time of issue of the invoice.
Let us examine and arrive at the time of supply in this case.
Thus the time of supply is 15th February.
What happens if, in the same incident an advance of Rs 100,000 is received by Mr. Ramu on 1st February?
The time of supply for the advance of Rs 100,000 will be 1st February(As the date of receipt of advance is before the invoice is given). For the balance of Rs 100,000, the time of supply will be 15th February.
Time of supply of services will be the earliest of the following:
Mr. Amal offers services worth Rs 100000 to Mr. Ameen on 4th April. The invoice was given on 24th April and the payment was received on 6th May.
In this case, It is required to check first if the invoice was issued within the stipulated time. The prescribed time is 30 days from the date of supply i.e. 5th May. The invoice was given on 24th April. This means that the invoice was issued within the stipulated time limit.
This denotes that the time of supply of services will be 24th April.
In the case of reverse charge, the time of supply for the service receiver is the earliest of
For example
X Pvt. Ltd undertook the service of a director Mr. AA worth Rs. 100,000 on 15th February. The invoice was raised on 1st March. X Pvt Ltd made the payment on 1st April.
Thus, the time of supply of services is 2nd May.
It is very significant to understand the term ‘place of supply’ for calculating the right tax to be charged on the invoice.
Here is an example:
|
Location of Service Receiver |
Place of supply |
Nature of Supply |
GST Applicable |
|
Kerala |
Kerala |
Intra-state |
CGST + SGST |
|
Kerala |
Tamil Nadu |
Inter-state |
IGST |
Normally, in the case of goods, the goods are delivered in the place of supply.
So, the ownership of goods changes at the place of supply of goods.
Unless there is the movement of goods, the place of supply is the location of goods at the time of delivery to the recipient.
For example: In the case of sales in a Marginfree supermarket, the place of supply is the Marginfree supermarket itself.
The place of supply in cases where goods are assembled and installed would be the location where the installation is done.
Normally, the place of supply for services is the location of the service recipient.
In cases where the services are offered to an unregistered dealer and their location is not available, the location of the service provider would be the place of provision of service.
Particular provisions have been made to ascertain the place of supply for the following services:
In case of services regarding immovable property, the location of the property is the place of provision of services.
Value of supply denotes the money that a seller wants to collect for the goods and services supplied. The amount collected by the seller from the buyer is the value of the supply. But where parties are related and a reasonable value may not be imposed, or transaction may occur as barter or exchange; the GST law says that the value on which GST is charged has to be its ‘transactional value’. This is the value at which unrelated parties would transact in the normal course of business. It ensures that the GST is imposed and collected properly, even if the full value may not have been incurred through payment.
