Time of Supply
The ‘time supply’ is the point when the liability to charge GST arises. It also indicates when a supply is deemed to have been made. As per the GST Acts (CGST and SGST/UGST Acts), there are separate provisions for ‘time of supply for goods’ and ‘time of supply of services’. These are discussed below:
Time of
Supply of Goods
According to section 12(1) of the GST Act, 2017, the liability to
pay tax on goods shall arise at the time of supply, as determined in accordance
with the provisions of this section. According to section 12(2) of the Act, the
time of supply of goods shall be the earlier of the following dates, namely:
a) The date of issue of invoice by the supplier or the last date
on which he is required, under section 31, to issue the invoice with respect to
the supply; or
b) The date on which the supplier receives the payment with
respect to be supply;
Provided that where the supplier of taxable goods receives an
amount up to one thousand rupees in excess of the amount indicated in the tax
invoice, the time of supply to the extent of such excess amount shall, at the
option of the said supplier, be the date of issue of invoice in respect of such
excess amount.
Time of
Supply of Services
According to section 13(1) of the AGST Act, 2017, the liability to
pay tax on services shall arise at the time of supply, as determined in
accordance with the provisions of this section. The time of supply or services
shall be the earliest of the following dates namely:
a)
The date of issue of invoice by the
supplier, if the invoice is issued within the period prescribed under section
31 (issue of Tax Invoice) or the date of receipt of payment, whichever is
earlier; or
b)
The date of provision of service, if
the invoice is not issued within the period prescribed under section 31 (issue
of Tax Invoice) or the date of receipt of payment, whichever is earlier; or
c)
The date on which the recipient shows
the receipt of services in his books of account, in a case where the provisions
of clause (a) or clause (b) do not apply:
Provided that where the supplier of taxable
service receives an amount up to one thousand rupees in excess of the amount
indicated in the tax invoice, the time of supply to the extent of such excess
amount shall, at the option of the said supplier, be the date of issue of
invoice relating to such excess amount.
Reverse Charge
As per Section 2(98), “reverse charge” means:
The liability to pay tax by the recipient of supply of goods or services or
both instead of the supplier of such goods or services or both under
sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or
sub-section (4) of section 5 of the Integrated Goods and Services Tax Act;
When
is Reverse Charge Applicable:
(1) Supply from an Unregistered dealer to
a Registered dealer: If a vendor who is not registered
under GST, supplies taxable goods to a person who is registered under GST, then
Reverse Charge would apply. This means that the GST will have to be paid
directly by the receiver to the Government instead of the supplier.
The registered dealer who has to pay
GST under reverse charge has to do self-invoicing for the purchases made.
For Inter-state purchases the buyer
has to pay IGST. For Intra-state purchased CGST and SGST has to be paid under RCM
by the purchaser.
(2) Services through an e-commerce
operator: If an e-commerce operator supplies services
then reverse charge will be applicable to the e-commerce operator. He will be
liable to pay GST.
(3) Recipient of goods and services
Notified u/s 9(3) of the AGST Act: By virtue of power conferred under
section 9(3) of the Act, the Government notified the goods and services which
are covered under RCM under section 9(3) of the AGST Act, 2017. Therefore,
recipient of any such notified goods and services are required to pay GST under
RCM.
Time of
Supply under Reverse Charge:
Time of supply of goods and services for the
purpose of reverse charge is required to be determined for the purpose of
ascertaining the time when the liability to pay GST under RCM arises. This is
ascertained as under:
(A) Time of Supply in case of Goods: In
case of supply of goods for reverse charge, the time of supply shall be the
earliest of the following dates:
(1) The
date of receipt of goods.
(2) The
date of payment.
(3) The
date immediately after 30 days from the date of issue of an invoice by the
supplier.
For example, Date of receipt of goods
15th July 2018, Date of payment 15th August, 2018, Date
of invoice 1st July, 2018, Date of entry in books of receiver 20th
July, 2018.
The Time of supply of service, in this
case, will be 15th July, 2018.
However, where it is not possible to
determine the time of supply, the time of supply shall be the date of entry in
the books of account of the recipient.
(B) Time of Supply in case of Services: In
case of supply of services for reverse charge, the time of supply shall be the
earliest of the following dates:
(1) The
date of payment; or
(2) The
date immediately after 60 days from the date of issue of invoice by the
supplier.
However, where it is not possible to
determine the time of supply, the time of supply shall be the date of entry in
the books of account of the recipient.
Value of Supply of Good or Services
Value
of supply means the money that a seller would want to collect for the goods or
services supplied. The amount collected by the seller from the buyer is the
value of supply. But where parties are related and a reasonable value may not
be charge, or transaction may take place as a barter or exchange, the GST law
prescribes that the value on which GST is charged must be its transactional
value. This is the value at which unrelated parties would transact in the
normal course of business. It makes sure that GST is charged and collected
properly, even though the full value may not have been paid.
Place of supply
It is very important to understand the term ‘place of
supply’ for determining 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 |
|
Maharashtra |
Maharashtra |
Intra-state |
CGST
+ SGST |
|
Maharashtra |
Kerala |
Inter-state |
IGST |
Place of Supply
of Goods
Usually, in case of goods, the place of supply is where the goods are
delivered. So, the place of
supply of goods is the place where the ownership of
goods changes. But if there is no movement of goods, the place of supply is the
location of goods at the time of delivery to the recipient. For example: In
case of sales in a supermarket, the place of supply is the supermarket itself.
Place of supply in cases where goods that are assembled and
installed will be the location where the installation is done.
For example, a supplier located in Kolkata supplies
machinery to the recipient in Delhi. The machinery is installed in the factory
of the recipient in Kanpur. In this case, the place of supply of machinery will
be Kanpur.
Place of Supply
for Services
Generally, the place of
supply of services is the location of the service
recipient. In cases where the services are provided to an unregistered dealer
and their location is not available the location of service provider will be
the place of provision of service. Special
provisions have been made to determine the place of supply for the following
services:
a)
Services
related to immovable property
b)
Restaurant services
c)
Admission to events
d)
Transportation
of goods and passengers
e)
Telecom services
f)
Banking,
Financial and Insurance services.
In case of services related to immovable property, the location of the
property is the place of provision of services.
Example 1:
Mr. Anil from Delhi provides interior designing services to Mr.
Ajay(Mumbai). The property is located in Ooty (Tamil Nadu). In this case, place
of supply will be the location of the immovable property i.e. Ooty, Tamil Nadu.
Example 2:
A registered taxpayer offers passenger transport services from Bangalore
to Hampi. The passengers do not have GST registration. The place of supply is
the place from where the departure takes place i.e. Bangalore in this case.
Reference: Cleartax Only for Educational Purpose
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