GST TAX MOD 8-10 Flashcards
Time of supply under normal charge
Time of supply under normal charge
The time of supply of goods shall be the earlier of the following dates:
(a) The date of issuing of invoice (or the last day by which invoice should have been issued*)
OR
(b) The date of receipt of payment
*In case where the supply involves the movement goods, the invoice needs to be issued at the time of removal. In other cases, the invoice needs to be issued at the time of delivery of goods to the recipient.
Notes:
If the supplier receives an amount up to Rs.1,000 in excess of the invoice amount, the time of supply for the extra amount shall be the date of issue of invoice (at the option of the supplier).
For (a) and (b)- The supply shall be assumed to have been made to the extent it is covered by the invoice or the payment (as the case may be).
For (b)- the date of receipt of payment shall be earlier of-
1. The date on which he entered the payment in his books
OR
- The date on which the payment is credited to his bank account
Illustration:
(a) Date of invoice 15th May 2021
(b) Date of receipt of payment 10th July 2021
(c) Date when supplier recorded receipt in books 11th July 2021
The time of supply will be 15th May 2021.
IF:
17th September: Purchase order received with an advance payment of ₹ 50,000.
20th October: The machine is assembled, tested, and accepted by the buyer. This is the point when the goods are effectively made available to the recipient at the site.
23rd October: Invoice raised.
4th November: Balance payment of ₹ 11,50,000 received.
What is the time of supply
Section 12(2)(a) of the CGST Act, 2017: This section deals with the time of supply of goods and states that the time of supply shall be the earliest of the following dates:
- The date of issue of invoice by the supplier or the last date on which he is required, under section 31, to issue the invoice with respect to the supply; or
- The date the supplier receives the payment with respect to the supply.
Section 31 of the CGST Act, 2017: This section prescribes the time limit for issuing an invoice for the supply of goods. Specifically, Section 31(1)(a) states that a registered person supplying taxable goods shall, before or at the time of removal of goods for supply to the recipient, where the supply involves movement of goods, issue a tax invoice. Section 31(1)(b) states that in any other case (where the supply does not involve movement of goods), the invoice shall be issued before or at the time of the delivery of goods or making available thereof to the recipient.
Analyzing the Illustration:
In this scenario, the machine is assembled at the site, implying that the supply does not involve the movement of goods in a traditional sense (finished goods being transported from the supplier’s premises). The components are sourced separately and assembled at the buyer’s location. Therefore, Section 31(1)(b) regarding the issuance of the invoice will be relevant.
THE MACHINE WAS MADE AVAILABLE to the buyer on 20th october so even though the invoice was raised on 23rd- time of supply of the 11,50,000 is 20th october only as it is the earlier of the two
for the advance payment- the date of supply will be 17th - when 50K was sent.
Therefore, there will be two times of supply in this scenario:
For the advance payment of ₹ 50,000: The time of supply will be 17th September (the date of receipt of payment).
For theremaining supply of ₹ 11,50,000: The time of supply will be the earliest of the date of the invoice (23rd October) or the date the goods were made available (20th October), which is 20th October.
Continuous supply of gas via pipeline.
Monthly payments of ₹ 2 lakh each are made on July 5, August 5, and September 5.
We need to determine the time of supply for each payment.
Scenario 2: Gas Supply via Pipeline (Section 12(2)(a) read with Section 31)
For continuous supplies of goods, Section 31(5) of the CGST Act comes into play. It states that where there is a continuous supply of goods, and successive statements of accounts or successive payments are involved, the invoice shall be issued before or at the time each such statement is issued or each such payment is received, whichever is earlier
Therefore, for each monthly payment, the earliest of the invoice date (on or before the payment date) and the payment receipt date is the payment receipt date itself
Scenario 3: Reverse Charge (Section 12(3))
May 4: Supplier invoices goods taxable under reverse charge to Bridge & Co.
May 12: Bridge & Co receives the goods.
May 30: Bridge & Co makes the payment.
June 3: 30 days elapse from the date of the supplier’s invoice (May 4 + 30 days = June 3).
Section 12(3) deals with the time of supply of goods under reverse charge. It states that the time of supply shall be the earliest of the following dates:
- The date of the receipt of goods; or
- The date of payment; or
- 30 days from the date of issue of invoice by the supplier.
If the time of supply cannot be determined using the above, then it shall be the date of entry in the books of account of the recipient of supply.
Answer for Scenario 3:
The time of supply for the goods taxable under reverse charge is May 12 (the date Bridge & Co received the goods).
Acmesales Limited sells food coupons to a company.
The company gives these coupons to its employees.
The coupons can be redeemed for any food item/provisions in participating outlets.
Understanding Section 12(4) of the CGST Act, 2017:
Section 12(4) deals with the time of supply in respect of vouchers. It states that the time of supply shall be:
(a) the date of issue of voucher, if the supply is identifiable at that point; or
(b) the date of redemption of voucher, in all other cases.
n this scenario, at the time of the issue of the food coupons by Acmesales Limited to the company, the specific supply (what food item will be purchased and when) is not identifiable. The coupons can be redeemed for a variety of food items at different times by the employees.
Determining the Time of Supply:
Since the supply is not identifiable at the time of the issue of the voucher, Section 12(4)(b) will apply. The time of supply will be the date of redemption of the voucher.
Radha Traders sold goods to Shyam Sales on June 6th.
Invoice was also issued and goods were delivered on June 6th.
A condition of 2% interest per month applied if payment wasn’t made within 15 days.
Shyam Sales paid the consideration along with applicable interest on July 6th.
nderstanding Section 12(6) of the CGST Act, 2017:
Section 12(6) deals with the time of supply of interest, late fee or penalty for delayed payment of any consideration. It states that the time of supply shall be the date when the supplier receives such interest, late fee or penalty.
The time of supply for the interest received by Radha Traders from Shyam Sales is July 6th, the date on which the interest was paid. The time of supply for the original sale of goods would have been determined based on Section 12(2)(a) (earliest of invoice date or payment date), which in this case would be June 6th (assuming payment was due after 15 days, the invoice date is earlier). Section 12(6) specifically addresses the interest component arising from the delayed payment.
Section 31 CGST Act, 2017
1- If goods are moved (e.g. you ship them): invoice by the time you hand them over to the transporter.
If no movement (e.g. customer picks up): invoice by the time you hand them to the buyer or make them available.
-
Tax Invoice for services
You can invoice before you render the service (e.g. advance billing).
Or after the service is done—but not later than the time‑limit notified (usually 30 days).
Example:
A consultant finishes a report on 10 June. She can invoice on 10 June or any day up to the prescribed deadline (say, by 9 July).
. Special situations
3. Revised invoice
If you register late but supplied earlier, you get 1 month to issue a corrected invoice for those past supplies.
-
Small supplies (< ₹ 200)
You need not issue a tax invoice for tiny sales (subject to conditions). -
Exempt supplies or composition dealers
Instead of a tax invoice, issue a Bill of Supply. -
Advance payments
When you take an advance, issue a Receipt Voucher.
If no supply ever happens, issue a Refund Voucher to return that money. -
Reverse charge purchases
If you pay tax on behalf of an unregistered supplier, you must issue a Purchase Invoice and a Payment Voucher when you pay them. -
Continuous supplies of goods
You issue an invoice each time you send a periodic statement of account or each time you receive payment—whichever happens first. -
Continuous supplies of services
If contract says “payment due on X date” → invoice on or before X.
If no due‑date in contract → invoice when you get paid.
If payment tied to an event (e.g. completion of work) → invoice on or before that event. -
If a continuous service stops early
Invoice immediately when the service ends, but only for what’s been delivered so far.
11: 31 (5) (a) where the due date of payment is ascertainable from the contract, the invoice shall be issued on or before the due date of payment;
(b) where the due date of payment is not ascertainable from the contract, the invoice shall be issued** before or at the time when the supplier of service receives the payment;**
- Approval sales (“sale or return”)
If goods go out on approval, you must invoice before or at the time they’re accepted by the buyer—or within 6 months of sending, whichever comes first.
Example:
A furniture maker sends a sofa on approval on 1 Jan. Buyer keeps it on 15 Mar. Maker invoices by 15 Mar (acceptance) or by 1 Jul (6 months), whichever is earlier.
Section 12. Time of supply of goods.
The liability to pay tax on goods shall arise at the time of supply-
TIME OF SUPPLY:
Eariler of the 2 dates:
1. Date of issue of invoice or the date when invoice is due to be issued per section 31-
2. date on which the supplier receives the payment
Provided that if they get an excess amount of upto 1K rupees, time of supply of this excess amount will also be date of date of issue of invoice per the option of the supplier
FOR REVERSE CHARGE BASIS
(3) Reverse Charge Mechanism (RCM)
If the buyer is paying GST instead of the seller (i.e. reverse charge), time of supply = earliest of:
- Date of receipt of goods
- Date of payment (books or bank, whichever earlier)
- 30 days after supplier issued invoice
If you can’t determine from the above, use the date of entry in recipient’s books.
4) Vouchers
🟢 (a) If voucher is specific (e.g. Flipkart ₹500 mobile-only voucher)
→ Time of supply = when issued
🟡 (b) If general (e.g. 500 rupee credit gift card)
→ Time of supply = when redeemed
If you can’t determine time of supply by earlier rules:
(a) If you file returns → date the return is to be filed
(b) If no return → date tax is paid
Section 13. Time of supply of services.
The time of supply of services shall be the earliest of:
1. the date of issue of invoice by the supplier
2. the date of receipt of payment,
3. date of service, if the invoice is not issued within the period per s. 31
if the above dont apply, then the the date on which the recipient shows the receipt of services in his books of account
FOR REVERSE CHARGE BASIS
1. 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
- the date immediately following sixty days from the date of issue of invoice
-Provided further that in case of supply by associated enterprises= if supplier of service is located outside india - time of supply will be the date of entry into books of account of recipient or the date of payment - whichever is earlier
Analyzing the Illustration:
Contract for consultancy services starts on September 1st.
Service is completed on September 15th (date of provision of service).
Invoice is issued on September 20th (within 30 days of the completion of service).
Payment is received on October 10th.
Determining the Time of Supply:
Applying Section 13(2)(a):
Date of issue of invoice: September 20th. The invoice was issued within 30 days from the date of the supply of service (September 15th), as required by Section 31(2).
Date of receipt of payment: October 10th.
Since the invoice was issued within the prescribed time, the time of supply is the earlier of the date of invoice and the date of receipt of payment.
Comparing September 20th and October 10th, the earlier date is September 20th.
Answer:
The time of supply for the consultancy services is September 20th
Convention Hall Booking (Section 13(2) read with Section 31)
Analyzing the Illustration:
May 6: Booking of convention hall, advance of ₹ 3,000 received.
September 15: Function held in the convention hall (date of provision of service).
October 27: Invoice issued for ₹ 15,000 (balance ₹ 12,000 payable).
November 3: Balance payment of ₹ 12,000 received.
There will be two times of supply in this scenario:
For the advance payment, Date of receipt of payment of ₹ 3,000: May 6th.
For the remaining consideration of ₹ 12,000:
Date of issue of invoice: October 27th (issued within 30 days of the provision of service).
Date of receipt of balance payment: November 3rd.
Applying Section 13(2)(a), the time of supply for the balance is the earlier of the date of invoice and the date of receipt of payment. Comparing October 27th and November 3rd, the earlier date is October 27th.
Analyzing the Illustration: FOR REVERSE CHARGE MECHANISM
May 4: The supplier of service issues an invoice for the service provided. There is a dispute about the amount payable, and payment is delayed.
August 21: Payment is made to the supplier of service.
Understanding Section 13(3) of the CGST Act, 2017:
Section 13(3) deals with the time of supply of services under reverse charge. It states that the time of supply shall be the earliest of the following dates:
- The date of payment entered into books of accounts or on which the payment was debited in his bank acc; or
- Sixty days from the date of issue of invoice by the supplier.
invoice was supplied on may 4- so 60 days from may 4 will be 3rd JULY
so since 3rd july is earlier than august 21- then 3rd july will be date of
Section 14 of cgst act- change of rate of tax
(a) Goods or Services SUPPLIED BEFORE the rate change
📌 Then you check the timing of invoice and payment:
Scenario Time of Supply (i.e., which rate applies)
(i) Invoice & payment after rate change= Earlier of invoice or payment
(ii) Invoice before, payment after= Date of invoice
(iii) Payment before, invoice after= Date of payment
✅ Example 1 – Supplied before rate change
GST rate increased from 12% to 18% on 1st July
Goods supplied: 30th June (before change)
Invoice: 2nd July
Payment: 3rd July
➡ Time of supply = earlier of invoice/payment = 2nd July → New rate applies (18%)
✅ Example 2 – Supplied before, Invoice before, Payment after
Goods supplied: 30th June
Invoice: 30th June
Payment: 3rd July
➡ Time of supply = Date of invoice = 30th June → Old rate applies (12%)
(b) Goods or Services SUPPLIED AFTER the rate change
(i) Invoice before, payment after= Date of recipet pf payment
(ii) Invoice & payment before change= Earlier of invoice/payment
(iii) Payment before, invoice after= Date of invoice
✅Example 3 – Supplied after rate change
Rate changed on 1st July (from 12% to 18%)
Goods supplied: 2nd July
Invoice: 28th June
Payment: 5th July
➡ Time of supply = Date of payment = 5th July → New rate applies (18%)
✅ Example 4 – Supplied after, Invoice & Payment before
Goods supplied: 2nd July
Invoice: 28th June
Payment: 30th June
➡ Time of supply = Earlier of invoice/payment = 28th June → Old rate applies (12%)
SECTION 15 (1) of CGST ACT
The value of a supply of goods or services or both shall be the transaction value, **which is the price actually paid **or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related parties and the price is the sole consideration for the supply.
INCLUSIONS IN VALUE:
- Taxes, duties, Cess, fees, other charges OTHER THAN GST
- payment to 3rd party, that supplier is liable to pay in relation to supply but has already been incurred by the recipient
- incidental expense such as packaging comission etc charged by supplier to recipient
- any amount charged for anything done by supplier at the time of/ before delivery of goods/services
- interest late fee penalty etc
- subsidies given (other than govt/state subsidy)
Whole sale price of 1 T =on of cement sold by x Ltd in ordinary course of businesS: 7000 rs,
X ltd sells it to unrelated customer for: 6,500 rs
the value of supply is 6500, the price actually payable or paid not the Wholesale price
Grand Biz contracts with ABC Co. to conduct a dealers meet. in furtherance of this, grand Biz contracts with vendors to deliver goods/ servives, like water, soft frinks, audio system, at the venue on the stipulated dates at the stipulated prices, grand biz is liable to make these payments as contracted.
The soft drinks supplier wants payment upon delivery ABC co agrees to pay the bill raised by the soft drinks vendor on grand Biz - oN receiving the crates. the amount is not billed by Grand Biz to ABC
However this would be added to the value of suppy provided by Grand Biz to ABC Co. for payment of GST
SECTION 15 (3) OF CGST ACT:
DISCOUNT
The value of the supply shall not include any discount
which is given––
(a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and ()
(b) after the supply has been effected, if—
(i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and
(ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply.
POST SUPPLY DISCOUNT
- Staggered Discounts
depends on purchase volume- example.
10% discount for purchases above 5000 rupees.
20% discount for purchases above 10k - Periodic discounts - additonal discounts of 1% if you purchase 10k pieces a year, additional discount of 2% if you purchase 15k pieces in a year.
- Secondary discounts- this is not excluded-
M/s A supplies 10k packets of biscuits to M/s B at 10rs per packet. afterwards, M/s A revalues it at 9 rupees- so M/s A issues credit note to M/s B for 1 rupee per packet.
Post supply discount by example
Scenario: Raju Electrical Appliances offers its dealers a 5% discount on each rice cooker if they purchase over 1000 pieces during the Diwali month. The discount quantity can only be determined at the end of the Diwali month. However, the agreement regarding this discount existed at the time of supply, and the discount can be calculated for each invoice.
oncept: This illustrates a post-supply discount. According to Section 15(3)(b) of the CGST Act, 2017, the value of supply shall not include any discount that is allowed after the supply has been effected, provided that:
**Such discount is established in terms of an agreement entered into at or before the time of such supply. **
Such discount is specifically linked to the relevant invoices.
GST Treatment:
Initial Invoice: When Raju Electrical Appliances initially sells the rice cookers during the Diwali monththe invoice will be raised at the full price (without considering the potential 5% discount) GST will be calculated and paid on this full value. The dealer will avail ITC on the GST paid on the initial invoice value.
.Post Diwali Month Adjustment.: Once the dealer meets the target of purchasing over 1000 rice cookers, .Raju Electrical Appliances can issue a credit note to the dealer for the 5% discount.. This credit note can also include the proportionate GST amount related to the discount.
Dealer’s Responsibility: The dealer, having received the credit note with the reduced price and GST, .will be required to reverse the proportionate input tax credit that they had earlier availed on the discounted value.. This ensures that the ITC claimed is aligned with the final price paid after the discount.
what about government subsidies on value of supply?
acc to section 15 (2) The value of supply shall include-e) subsidies directly linked to the price excluding subsidies provided by the Central Government and the State Governments.
Explanation.–For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy.
so if a nbk costs 50 rupees, and if it is sold to govt schools and company uses CSR funds - and the company pays 30 rs to seller so that students only pay 20 rs per notebook- the actual value of notebook will remain as 50 rs because this is non govt subsidy
howeve,r if the same subsidy was paid by central or state govt- the value of notebook will be 20 rs
Scenario: Royal Biscuit Co. lists a price of ₹ 200 for a carton of Spice Bisk. They offer a 30% discount to their distributors, bringing the final invoice value to ₹ 140. This discount is clearly mentioned on the invoice.
Concept: This exemplifies a discount allowed at the time of supply. According to Section 15(3)(a) of the CGST Act, 2017, the value of supply shall not include any discount that is allowed before or at the time of supply if such discount has been duly recorded in the invoice issued in respect of such supply.
GST Treatment: In this case, since the 30% discount (₹ 60) is explicitly mentioned on the invoice, the taxable value for GST will be the discounted price of ₹ 140. GST will be calculated on this value. The supplier will charge GST on ₹ 140, and the distributor will be eligible for input tax credit (ITC) based on the GST paid on ₹ 140.
Discount at the Time of Supply (Section 15(3)(a)): If the discount is known and clearly stated on the invoice at the time of supply, GST is levied on the discounted value.
Post-Supply Discount (Section 15(3)(b)): If the discount is provided after the supply, it can be excluded from the value of supply (and GST adjusted) only if:
1. There was a prior agreement for the discount.
2. The discount can be linked to specific invoices.
3. The supplier issues a credit note (including the GST component).
4. The recipient reverses the corresponding input tax credit
examples of discounts that are not deductible from the value of supply for GST purposes.
Scenario: PBPL sells goods to OPL. The original terms of supply did not include any discount for early payment. However, after the supply, PBPL offers a 2% discount (₹ 1,000) to OPL for making payment within one month. PBPL issues a commercial credit note for the discount amount. OPL pays the reduced amount (₹ 58,000) to PBPL.
This illustrates a discount offered after the supply where there was no prior agreement for such a discount at or before the time of supply. According to Section 15(3)(b)(i) of the CGST Act, 2017,a post-supply discount is deductible only if it is established in terms of an agreement entered into at or before the time of supply.
GST Treatment:
Non-Deductible Discount: Since there was no prior agreement for this 2% discount, it will not be allowed as a deduction from the value of supply for GST purposes.
Commercial Credit Note: PBPL’s issuance of a commercial credit note only reduces the amount receivable from OPL for the value of the goods. It does not have any GST implications in terms of reducing the original taxable value.
No ITC Reversal for Recipient: OPL, the recipient, will not be required to reverse any input tax credit because the original taxable value remains unchanged for GST purposes.
No GST Liability Reduction for Supplier: PBPL, the supplier, will not be able to reduce its GST liability for the month of the original supply
