Time of Supply for Goods

SECTION : Time of Supply

DESCRIPTION
  • Lesson Objectives


    On completion of this lesson, you will be able to understand:


    ·     Meaning of Time of Supply

    ·     Section 12(2) - Time of Supply for Goods

    ·     Section 12(3) - Time of Supply under Reverse Charge

    ·     Section 12(4) - Time of Supply for Vouchers

    ·     Other Cases.

     

    Please go through the First Video of the Chapter 5.

     

    Time of supply

    The time of supply fixes the point when the liability to charge GST arises. It also indicates when a supply is deemed to have been made.

     

    There is separate time of supply for goods and services.

     

    Time of Supply – Goods

    The time of supply of goods will be calculated as below.

    Supply

    Calculation

    Forward charge

    The Earliest of following should be taken:

    1.       Date of issue of invoice *

    OR
    2.       Date of receiving the payment**

     

    * Date of Issue of Invoice

    Date of issue of invoice by the supplier or the last date on which he is required to issue the invoice with respect to the Supply u/s. 31(1).

     

    Time limit for issue of invoice u/s Sec. 31(1) is before or at the time of –

    a.      Removal of goods, where supply involves movement of goods;

    b.      Delivery of goods or making available to the recipient, in any other case.

     

    ** Date of Receiving the Payment

                Date of Receiving the Payment shall be earliest of the following:

    a.      The date on which the payment is entered in suppliers books of account or

    b.      The date on which the payment is credited to suppliers’ bank account.

     

    For example:

     

    M/s Indus Enterprises has supplied goods on 20th July, 2018. The invoice is issued on 15th July 2018. The payment was received by cheque on 30th July 2018 and it was accounted on the same day. The cheque was cleared on 3rd August 2018. Determine the time of supply.

     

    The time of supply shall be the earliest of date of issue of invoice or the date of payment. The following is the analysis of the various dates.

     

    Particulars

    Events - Dates

    Dates

    Date of Invoice & Date of Payment

    Time of

    Supply

    Date of

    Invoice

    Date of issue of

    invoice

    15.07.2018

     

    15.07.2018

     

     

     

    15.07.2018

    Last date for

    issue of invoice

    20.07.2018

    Date of

    Payment

    Accounted in

    Books

    30.07.2018

     

    30.07.2018

    Credited in Bank

    Account

    03.08.2018

    Note: Here the last date for issue of invoice u/s 31(1) shall be the date of removal of goods where supply involves movement of goods i.e. 20.07.2018

     

    Time of supply on continuous supply of goods

     

    The time of supply of continuous supply of goods is;

    a) Where successive statements of accounts or successive payments are involved, the date of expiry of the period to which such successive statements of accounts or successive payments relate.

    b) Where there are no successive statements of account or successive payments involved, the date of issue of the invoice or the date of receipt of payment whichever is earlier.

     

    Time of supply of “Goods sent on approval basis”

     

    Goods sent on Approval basis means the buyer can confirm the sale or reject the goods on a later stage. In case of supply on approval basis, the time of supply shall be the time at which

    a)     It is known whether a supply will take place or

    b)    Six months from the date of supply, whichever is earlier.

     

     

    Time of Supply of goods under Reverse Charge – Sect. 12(3)

     

    Supply

    Calculation

    Reverse charge

    The Earliest of Following should be taken:

    1.       Date of receipt of goods or
    2.       Date of payment* or
    3.       Date immediately following 30 days from date of invoice.

    If above events are unable to be determined, then the date of entry in the books of account of the recipient will be the time of supply

     

    * Date of Payment

                Date of Payment shall be earliest of the following:

    a.      The date on which the payment is entered in Recipients books of account or

    b.      The date on which the payment is debited to Recipients bank account.

     

    Time of Supply of goods in case of vouchers – Sec. 12(4)

     

    Supply

    Calculation

    Vouchers

    1.              Date of issue of voucher, if the supply is identifiable at that point; or

    2.              The date of redemption of the voucher, in all other cases.

     

    Time of Supply in any other case

    Where it is not possible to determine the time of supply, then the time of supply will be

    a.              In a case where periodical return has to be filed, the date on which such return is to be filed; or

    b.              In any other case, the date on which the tax is paid.

     

    Addition in Value of Supply

    If there is addition in value of supply by way of interest, late fee or penalty for delayed payment of any consideration, then the date of receipt of such addition in value will be the Time of Supply.

    Where the supplier receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply will be the date of issue of invoice in respect of such excess amount. It is at the option of the Supplier.

     

    Part Payment

    Suppose part advance payment is made or invoice issued is for part payment, the supply shall be deemed to have been made to the extent it is covered by the invoice or the part payment. The Time of Supply will not cover the full supply.

     


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