Time of Supply for Services

SECTION : Time of Supply

DESCRIPTION
  • Lesson Objectives


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

    ·        Meaning of Time of Supply

    ·       Section 13(2) - Time of Supply for Goods

    ·      Section 13(3) - Time of Supply under Reverse Charge

    ·      Section 13(4) - Time of Supply for Vouchers

    ·      Other Cases.

     

    Please go through the Second Video of the Chapter 5.

    Time of Supply - Services

     

    Time of Supply – Services

    The time of Supply is determined to fix the point when the liability to charge GST arises. At this point, Taxable Person is liable to pay GST.

     

    Unlike goods, in the case of services, the time of supply is determined by the fact whether the invoice for supply of services has been issued within the prescribed period or beyond such prescribed period.

     

    Time of Supply of Services – Forward Charge

     

    Situation

    Calculation

    Where the invoice is issued for service within 30 days from the date of supply of service.

     

    (45 days in case of a banking company or a financial institution or an insurer)  

    The Earliest of following should be taken:

    1.       Date of issue of invoice

    OR
    2.       Date of receipt of payment*

    Where the invoice is not issued within 30 days or 45 days, as the case may be, date of supply of service.

     

    The Earliest of following should be taken:

    1.       Date of provision of service

    OR
    2.       Date of receipt of payment*

    In any other case

    The date on which the recipient shows the receipt of services in his books of account.

     

    * Date of Receipt of 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.

     

    ·        Where a portion of agreed consideration is received as advance or invoice is issued for a portion of the advance received, and then the time of supply will be applicable only for the part and not whole 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.

     

    Example: Determination of time of supply for services in the below cases.

     

    SI No.

    Date of Provision of Service

    Date of Issue

    of Invoice

    Date of Receipt

    of Payment

     

    1

    10.07.2018

     

    15.07.2018

    30.07.2018

    2

    10.07.2018

     

    15.08.2018

    30.07.2018

    3

    10.07.2018

     

    15.07.2018

    08.07.2018

     

    4

    10.07.2018

     

    15.07.2018

    05.07.2018

    08.07.2018

     

    5

    10.07.2018

     

    15.07.2018

    13.07.2018

    6

    10.07.2018

     

    17.07.2018

    08.07.2018

    19.08.2018

     

     

    Solution: The following points can be noted.

    ·        The Time of Supply should be taken as (a) The Date of Issue of Invoice or (b) The date of receipt of payment whichever is earlier.

    ·        But if the invoice is not issued within 30 days of date of supply of service, the date of provision of service should be considered.

    ·        We have to check each payment date if part payment is involved.

      

    SI No.

    Time of Supply

    Explanation

     

    1

    15.07.2018

    Date of issue of Invoice

    Date of Issue of Invoice or Date of Receipt of Payment whichever is earlier.

    2

    10.07.2018

    Date of Provision of Service

    Invoice is not issued within 30 days.

    Date of Provision of Service or Date of Receipt of Payment whichever is earlier.

     

    3

    08.07.2018

    Date of Receipt of Payment

    Date of Issue of Invoice or Date of Receipt of Payment whichever is earlier.

    4

    05.07.2018

    08.07.2018

    Date of Receipt of Payment.

    Part Payment – both payments are before the Date of issue of Invoice.

    Date of Issue of Invoice or Date of Receipt of Payment whichever is earlier.

     

    5

    13.07.2018

    Date of Receipt of Payment.

    Date of Issue of Invoice or Date of Receipt of Payment whichever is earlier.

     

    6

    08.07.2018

    17.07.2018

     

    Part Payment – One Payment is before Date of Issue of Invoice and the other is after the Date of Issue of Invoice.

    Date of Issue of Invoice or Date of Receipt of Payment whichever is earlier.

     

     

    Time of Supply of Services under Reverse Charge – Sec. 13(3)

     

    Supply

    Calculation

    Reverse charge

    The Earliest of Following should be taken:

    1.       Date of payment* or
    2.       Date immediately following 60 days from date of issue 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.

     

    ** In case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment whichever is earlier.

     

     

    Time of Supply of goods in case of vouchers – Sec. 13(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 – Sec 13(5)

    Where it is not possible to determine the time of supply under the sections 13(2) or 13(3) or 13(4), 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.

     


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