Time of Supply
To calculate and discharge tax liability it is important to know the date when the tax liability arises i.e. the date on which the charging event has occurred.
Time of issue of invoice for supply
An invoice for supply of services needs to be issued before or after the provision of service but not later than thirty days from the date of provision of service.
An invoice for supply of goods needs to be issued before or at the time of removal of goods for supply to the recipient, where the supply involves movement of goods. However, in other cases, an invoice needs to be issued before or at the time of delivery of goods or while making goods available to the recipient.
Point of time when supplier receives the payment or date of receipt of payment
“The date on which supplier receives the payment” or “the date of receipt of payment” means the date on which payment is entered in his books of accounts or the date on which the payment is credited to his bank account, whichever is earlier.
Time of supply of services in case of supply by Associated Enterprises located outside India
In this case, the time of supply is the date of entry in the books of account of the recipient or the date of payment, whichever is earlier.
Time of supply related to an addition in the value of supply by way of interest, late fees or penalty
Time of supply related to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which supplier receives such addition in value.
For example, a supplier receives consideration in the month of September instead of due date of July and for such delay he is eligible to receive an interest amount of Rs. 1000/- and the said amount is received on 15.12.17. The time of supply of such amount (Rs. 1000/-) will be 15.12.17 i.e. the date on which it is received by the supplier and tax liability on this is to be discharged by 20.01.18.
Goods or service supplied under an installment agreement
If the payment for a good or service being supplied has been agreed to be made within a stipulated period under an installment agreement, each installment paid or payable accordingly would be regarded as a separate taxable transaction. The time of supply in relation to any such transaction would be deemed to be the time the installment payment was received, or the time the installment payment would otherwise fall due, whichever is earlier.
Time of supply of goods when tax is to be paid on reverse charge basis
Earliest of the following dates:
- Date of receipt of goods
- Date on which the payment is entered in the books of accounts of the recipient or the date on which the payment is debited in his bank account, whichever is earlier
- Date immediately following 30 days from the date of issue of invoice or any other legal document in lieu of invoice by the supplier
However, if it is not possible to determine the time of supply in aforesaid manner, then the time of supply is the date of entry of the transaction in the books of accounts of the recipient of supply.
Time of supply of services when tax is to be paid on reverse charge basis
Earliest of the following dates:
- Date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier.
- Date immediately following 60 days from the date of issue of invoice or any other legal document in lieu of invoice by the supplier
However, if it is not possible to determine the time of supply in aforesaid manner, then the time of supply is the date of entry of the transaction in the books of accounts of the recipient of supply.
POS for Imports and Exports (Section 11)
1) Imports - The place of supply of goods imported into India shall be the location of the importer.
2) Exports - the place of supply of goods exported from India shall be the location outside India. Transactions other than Import or Export (Section 10)
1) Movement of Goods
Section 10(1)(a) states that "where the supply involves movement of goods, whether by the supplier or the recipient or by any other person, the place of supply of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient"
This implies that place of supplier or receiver is of no consequence to determine the place of supply when it comes to those transactions which involve the movement of goods. The place where delivery terminates i.e. where the ownership is passed on shall be critical to determine the place of supply.
2) Bill To Ship To Transactions:
Section 10(1)(b) states "where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person"
Read More →