TIME OF SUPPLY-1.pptx

A presentation on Time of Supply, residuary clause and a few problems based on that topic

1. TIME OF SUPPLY PART 1

2. Need and Meaning of Time of Supply: For the purpose of paying tax liability, point of taxation is required. Time of supply is nothing but, it is point of taxation. When the supplies have been made at that time, point of taxation has arisen. To find out that supplies have been made or not, we need to determine time of supply. Once time of supply occurred, a supplier is required to discharge his  GST liability . There are some general provision and some specific provision for determining time of supply. Time of supply is different for goods & services. If specific provision are applied to determine the time of supply then general provision are irrelevant.

3. DETERMINATION OF TIME OF SUPPLY To determine time of supply of Goods & Services, Four categories are provided as below: 1. Time of Supply of Goods & Services under Forward Charge. 2. Time of Supply of Goods & Services under Reverse Charge. 3. Time of Supply in case of Supply of Vouchers. 4. Residuary Clause.

4. Time of Issue of Invoice for Goods: i . If  movement of goods  involved in supply than before or at the time of removal of goods. ii. If  no movement of goods  involved in supply than before or at the time of delivery of goods or making available to the recipient. iii. If  continuous supply of goods  For Example., Supply of Oil etc. than earliest of the following: ♦ Time when each statement is issued. ♦ Time when each payment is received. iv. If  goods sent for approval  than earliest of the following: ♦ Time when it becomes known that supply is taken place. ♦ Six month from the date of removal.

5.   Time of Issue of Invoice for Services: i.e Before or after the provision of service but within a period prescribed: > 30 days in all cases except for banking and financial institutions from the date of supply of services. > 45 days in case of banking and financial institutions from the date of supply of services

6.  In case of continuous supply of services: > Due date of payment can be identified from the contract  : The invoice will be issued before or after the payment is to be made by the recipient but within 30 or 45 days of due date of payment. > Due date of payment is cannot be identified from the contract :  The invoice shall be issued before or after each time when the supplier of service receives the payment but within 30 or 45 days of receipt of payment > Payment is linked to the completion of an event : The invoice shall be issued before or after the time of completion of that event but within 30 or 45 days of completion of event. > Supply of services ceases under a contract before the completion of the supply : The invoice shall be issued at the time when the supply ceases and such invoice shall be issued to the extent of the service provide before stopping.

7. 3 . The supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment. 4. Date of Receipt of the payment by supplier:  Payment is entered into the books of the account or credited in his bank account whichever is earlier. 5. Optional Time of supply:  If amount up to Rs. 1,000 in excess of invoice amount is received then the supplier may take the time of supply is the date of invoice issued for such excess or advance received. 6. If invoice is not issued and date of payment or date of completion of provision of service are also not ascertainable, than the time of supply shall be the date on which the recipient shows the receipt of services in his books of accounts.

8. If time of supply cannot be determined with the help of above provisions then the time of supply shall be the date on which entry in the books of the recipient of goods & services is made.

9. 3.  Time of Supply of Vouchers for Goods & Services :

10. 4.  Residuary Clause

11. Case Events before change in effective rate of tax Events after change in effective rate of tax Time of supply if goods & services are supplied before change in effective rate of tax Time of supply if goods & services are supplied after change in effective rate of tax 1. Invoice Issued/Payment Received No activity . Date of receipt of payment or Date of issue of invoice Whichever is earlier NA 2. Invoice Issued/Payment Received Supply of Goods & Services NA Date of receipt of payment or Date of issue of invoice Whichever is earlier 3. Invoice issued Payment Received Date of Invoice Date of receipt of Payment 4. Payment Received Invoice Issued Date of receipt of Payment Date of Invoice TIME OF SUPPLY IN CASE OF CHANGE OF RATE IN TAX

12. The date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after four working days from the date of change in the rate of tax. Date of Receipt of the payment by supplier:  Payment is entered into the books of the account or credited in his bank account whichever is earlier.

13. PROBLEM NO: 1 Mr. A, a manufacturer, sold goods to Mr. B, wholesaler, and issued invoice for the sale on 01 st  August 2017. Now, determine the time of supply of goods for the following cases: a . Mr. A removes the goods for delivery to Mr. B on 16 th  August 2017. b . Mr. B collects the goods from premises of Mr. A on 10 th  August 2017. c . Mr. B made full payment on 26 th  July 2017. d . Mr. B credited the payment in bank account of Mr. A on 28 th  July 2017 for 3/4 th  of goods, Mr. A recorded the same as receipts in his books on 3 rd  August 2017. The goods were dispatched on 5 th  August 2017 from the warehouse.

14. SOLUTION a.  1 st  August 2017 is the time of supply of goods i.e. Earlier of the following: Date of Invoice – 1 st  August 2017 or Date on which invoice is required to be issued – 16 th  August 2017. b.  1 st  August 2017 is the time of supply of goods i.e. Earlier of the following: Date of Invoice – 1 st  August 2017 or Date on which goods is delivered – 10 th  August 2017.

15. C -  26 th  July 2017 is the time of supply of goods i.e. Earlier of the following: – Date of Invoice – 1 st  August 2017 or – Date of Payment – 26 th  July 2017. D - The time of supply of goods for 3/4 th  of the goods will be 28 th  July 2017 as the payment has been made prior to the date of invoice and the time of supply of goods will be 1 st  August 2017 for remaining 1/4 th  The late recording of receipt in the books by Mr. A will have no impact.

16. PROBLEM NO :2 Mr. A entered into a contract with Mr. B to supply of oil throughout the year. Mr. A issues monthly statement for the oil supplied to Mr. B. Now, determine the time of supply of goods in following cases: a. Mr. B made payment for the month of July on 31 st  July 2017 and Mr. A issued statement for the month of July on 8 th  August 2017. b. Mr. A issued statement for the month of August on 5 th  September 2017, the payment of which not received till 30 th  September 2017.

17. SOLUTION: A .  31 st  July 2017 will be the time of supply. Earliest of the following: Date of Invoice:  8 th  August 2017 Last date on which invoice has to be issued:  Date of payment or statement whichever is earlier i.e. 31 st  July 2017. B .  5 th  September 2017 will be the time of supply. Earliest of the following: Date of Invoice:  5 th  September 2017. Last date on which invoice has to be issued:  Date of payment or statement whichever is earlier i.e. 5 th  September 2017.

18. PROBLEM NO: 3 ABC Consultancy services issued invoice for services rendered to Mr. P on 5 th  August 2017. Determine the time of supply in following cases: a.  The provisions of services were completed on 1 st  July 2017. b.  The provisions of services were completed on 15 th  July 2017. c.  P made the payment on 3 rd  August 2017, where provisions of services were remaining to be completed. d.  P made the payment on 15 th  August 2017, where provisions of services were remaining to be completed.

19. SOLUTION: a.  1 st  July 2017 will be the time of supply of services as invoice is not issued within the time frame of 30 days. b.  5 th  August 2017 will be the time of supply of services as invoice is issued within the time frame. c.  3 rd  August 2017 will be the time of supply of services as payment received before invoice date. d.  5 th  August 2017 will be the time of supply of services as invoice is issued before the completion of provisions of services.

20. PROBLEM NO :4 Mr. A, a registered dealer received goods from Mr. B, an unregistered dealer. Mr. B issues invoice on 1 st  July 2017. Now, determine time of supply of goods in following cases: a. Mr. A received goods on 15 th  July 2017, payment of which is not made yet. b. Mr. A received goods on 3 rd  August 2017 & made payment for the same on 4 th  August 2017. c. Mr. A made payment on 8 th  July and received goods on the same date. d. Mr. A received goods on 10 th  July 2017 & made payment for the same on 9 th  July 2017.

21. SOLUTION: A - 15 th  July 2017 will be the time of supply of goods. Earliest of the following: Receipt of Goods = 15 th  July 2017 Date of Payment = NA 30 days from the date of invoice = 30 th  July 2017 B -   30 th  July 2017 will be the time of supply of goods. Earliest of the following: Receipt of Goods = 3 rd  August 2017 Date of Payment = 4 th  August 2017 30 days from the date of invoice = 30 th  July 2017

22. C -   8 th  July 2017 will be the time of supply of goods. Earliest of the following: Receipt of Goods = 8 th  July 2017 Date of Payment = 8 th  July 2017 30 days from the date of invoice = 30 th  July 2017 D -  9 th  July 2017 will be the time of supply of goods. Earliest of the following: Receipt of Goods = 10 th  July 2017 Date of Payment = 9 th  July 2017 30 days from the date of invoice = 30 th  July 2017

23. PROBLEM NO :5 ABC Ltd., a registered firm received services from PQR Ltd., an unregistered firm. PQR Ltd. issued invoice to ABC Ltd. on 1 st  July 2017. ABC Ltd. & PQR Ltd is not associated enterprises. Determine the time of supply of services: a. ABC Ltd. made the payments to PQR Ltd. on 15 th  August 2017. b. ABC Ltd. made the payments to PQR Ltd. on 11 th  September 2017.

24. SOLUTION a. 15 th  August 2017 will be the time of supply of services as payment made earlier than the date immediately following 60 days from date of issue of invoice. b. 30 st  August 2017 will be the time of supply of services as payment made after the date immediately following 60 days from date of issue of invoice.

25. PROBLEM NO :6 XYZ Ltd. & MNT Ltd. is associated enterprises. XYZ Ltd., a registered firm received the services of MNT Ltd., a unregistered firm. Determine the time of supply in following cases: a. XYZ Ltd. recorded the liability in the books on 15 th  July 2017 and payment will be made in the next month. b. XYZ Ltd. made advance payment to MNT Ltd. on 10 th  July and recorded liability in the books on 15 th  July 2017.

26. SOLUTION 15 th  July 2017 will be the time of supply of services as the date of entry in the books is prior to the date of payment. b. 10 th  July 2017 will be the time of supply of services as the payment is made earlier to the date of entry in the books.

27. PROBLEM NO :7 Mr. A is supplied goods to Mr. B on 28 th  December 2017. The GST rate on goods is changed from 12% to 5% w.e.f. 1 st  January 2018. Mr. A issued invoice on 28 th  December 2017 and payment is credited in his bank account on 30 th  December 2017.  What is the time of supply in this case?

28. SOLUTION Following Event have been done before change in effective rate of tax: Goods Supplied Invoice Issued Payment Received Time of supply will be earliest of the following: 28 th  December 2017 30 th  December 2017 Time of Supply will be 28 th  December 2017.

29. PROBLEM NO :8 Mr. A is supplied goods to Mr. B on 28 th  December 2017. The GST rate on goods is changed from 12% to 5% w.e.f. 1 st  January 2018. Mr. A issued invoice on 2 nd  January 2018 and payment is credited in his bank account on 29 th  December 2017.  What is the time of supply in this case?

30. SOLUTION Following Event have been done before change in effective rate of tax: Goods Supplied Payment Received Time of supply will be Date of receipt of payment i.e. 29 th  December 2017.

31. PROBLEM NO :9 Mr. A is supplied goods to Mr. B on 28 th  December 2017. The GST rate on goods is changed from 12% to 5% w.e.f. 1 st  January 2018. Mr. A issued invoice on 28 th  December 2017 and payment is credited in his bank account on 4 th  January 2018.  What is the time of supply in this case?

32. SOLUTION Following Event have been done before change in effective rate of tax: Goods Supplied Invoice Issued Time of supply will be Date of Invoice i.e. 28 th  December 2017.

33. PROBLEM NO :10 Mr. A is supplied goods to Mr. B on 2 nd  January 2018. The GST rate on goods is changed from 12% to 5% w.e.f. 1 st  January 2018. Mr. A issued invoice on 28 th  December 2017 and payment is credited in his bank account on 30 th  December 2017.  What is the time of supply in this case?

34. SOLUTION Following Event have been done before change in effective rate of tax: Invoice Issued Payment Received Time of supply will be earliest of the following: 28 th  December 2017 30 th  December 2017 Time of Supply will be 28 th  December 2017.  

35. PROBLEM NO :11 Mr. A is supplied goods to Mr. B on 2 nd  January 2018. The GST rate on goods is changed from 12% to 5% w.e.f. 1 st  January 2018. Mr. A issued invoice on 29 th  December 2017 and payment is credited in his bank account on 4 th  January 2017.  What is the time of supply in this case?

36. SOLUTION Following Event have been done before change in effective rate of tax: Invoice issued Time of supply will be Date of receipt of payment i.e. 4 th  January 2018.

37. PROBLEM NO :12 Mr. A is supplied goods to Mr. B on 2 nd  January 2018. The GST rate on goods is changed from 12% to 5% w.e.f. 1 st  January 2018. Mr. A issued invoice on 2 nd  January 2018 and payment is credited in his bank account on 29 th  December 2017.  What is the time of supply in this case?

38. SOLUTION Following Event have been done before change in effective rate of tax: Payment Received Time of supply will be Date of invoice i.e. 2 nd  January 2018.

39. PROBLEM NO :13 Let’s say there was increase in tax rate from 18% to 20% w.e.f. 1.6.2017. What is the tax rate applicable when services provided and invoice issued before change in rate in April 2017, but payment received after change in rate in June 2017?

40. SOLUTION The old rate of 18% shall be applicable as services are provided prior to 1.6.2017.