Time, Place and Value of Supply

Why are the time place and value of supply important?

Time of supply indicates the point in time when goods/services are considered supplied’. When the seller knows the ‘time’, it helps him identify the due date for payment of taxes.

Place of supply is required for determining the tax to be charged on the invoice, whether IGST or CGST/SGST will apply.

The value of supply is necessary because GST is calculated on the value of the sale. If the value is calculated incorrectly, then the amount of GST charged is also incorrect.

Time of Supply

Time of supply means the point in time when goods or services are considered supplied’. When the seller knows the ‘time’, it helps him identify the due date for payment of taxes.

CGST/SGST or IGST must be paid at the time of supply. Goods and services have a separate basis to identify their time of supply. Let’s understand them in detail.

Time of Supply of Goods

Time of supply is earliest: –

1. Date of issue of invoice

2. Last date on which invoice should have been issued

3. Date of receipt of advance/ payment*

For example:

Mr. A sold goods to Mr. B worth Rs 2,00,000. The invoice was issued on 18th January. The payment was received on 31st January. The goods were supplied on 24th January.

Time of supply is earliest of –

1. Date of issue of invoice = 18th January

2. Last date on which invoice should have been issued = 24th January

Thus the time of the supply is 15th January.

What will happen if, in the same example an advance of Rs 50,000 is received by Mr. A on 1st January?

The time of supply for the advance of Rs 50,000 will be 1st January(since the date of receipt of advance is before the invoice is issued). For the balance Rs 50,000, the time of supply will be 15th January.

Time of Supply for Services

1. Date of issue of invoice

2. Date of receipt of advance/ payment.

3. Date of provision of services (if the invoice is not issued within the prescribed period)

Let us understand this using an example:

Mr. X provides services worth Rs 40000 to Mr. P on 1st January. The invoice was issued on 25th January and the payment for the same was received on 5th Feb.

In this case, we need to 1st check if the invoice was issued within the prescribed time. The period is 30 days from the date of supply i.e. 31st January. The invoice was issued on 25th January, the invoice was issued within a prescribed time limit.

The time of supply will be the earliest of the two are–

1. Date of issue of invoice = 25th January

2. Date of payment = 5th February

This means that the time of the supply of services will be 25th January.

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.   

Place of Supply of Goods

Usually, in the case of goods, the POS (place of supply) is where the goods are delivered.

So, POS is the place where the ownership of goods changes.

What if there is no movement of goods? In this case, the place of supply is the location of goods at the time of delivery to the recipient.

For example: In the 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 Delhi supplies machinery to the recipient in UP. 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, POS 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 the service provider will be the place of provision of service.

That has been made to determine the place of supply for the following services:

  • Restaurant services
  • Service-related to immovable property.
  • Admission to events
  • Telecom services
  • Transport of goods and passengers.

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