Time of Supply under Reverse Charge.PPT.
- 1. TIME OF SUPPLY Presented by Dr. T. KANIMOZHI Assistant Professor PG and Research Department of International Business Sri Ramakrishna College of Arts & Science Coimbatore.
- 3. Time of Supply of Goods Time of supply of goods is earliest of: 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. X sold goods to Mr. Y worth Rs 1,00,000. The invoice was issued on 15th January. The payment was received on 31st January. The goods were supplied on 20th January.
- 4. Time of supply is earliest Date of issue of invoice – 15th January Last date on which invoice should have been issued – 20th January. Thus the time of supply is 15th January. What will happen if, in the same example an advance of Rs 50,000 is received by Mr. X 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.
- 5. Time of Supply for Services Time of supply of services is earliest of: Date of issue of invoice Date of receipt of advance/ payment. Date of provision of services (if invoice is not issued within prescribed period) Let us understand this using an example: Mr. A provides services worth Rs 20000 to Mr. B on 1st January. The invoice was issued on 20th January and the payment for the same was received on 1st February. In the present case, we need to 1st check if the invoice was issued within the prescribed time. The prescribed time is 30 days from the date of supply i.e. 31st January. The invoice was issued on 20th January. This means that the invoice was issued within a prescribed time limit.
- 6. Time of Supply under Reverse Charge In case of reverse charge the time of supply for service receiver is earliest of: Date of payment* 30 days from date of issue of invoice for goods (60 days for services) *w.e.f. 15.11.2017 ‘Date of Payment’ is not applicable for goods and applies only to services. Notification No. 66/2017 – Central Tax For example: M/s ABC Pvt. Ltd undertook service of a director Mr. X worth Rs. 50,000 on 15th January. The invoice was raised on 1st February. M/s ABC Pvt Ltd made the payment on 1st May. The time of supply, in this case, will be earliest of – Date of payment = 1st May 60 days from date of date of invoice – 2nd April Thus, the time of supply of services is 2nd April.
- 7. Key Elements in Determining Time of Supply Type of Supply: The time of supply can vary depending on whether the supply is goods or services. The GST Act has distinct provisions for goods and services. Invoice or Payment Date: The date of issue of an invoice or the date of receipt of payment, whichever is earlier, is generally the time of supply. This is often applicable to business-to-business (B2B) transactions. Date of Delivery: In cases where it is not possible to determine the time of supply based on invoices or payments, the date of delivery of goods or services becomes the critical factor. Continuous Supply: For continuous or recurring supplies, the time of supply is the earlier of the date of issue of invoice or the due date of payment. Reverse Charge: In the case of the reverse charge mechanism, where the recipient is liable to pay GST, the time of supply is the date of receipt of goods or services or the date of payment, whichever is earlier. Specific Scenarios: The GST Act includes specific rules for situations like the sale of vouchers, securities, and works contracts, each with its own criteria for determining the time of supply.
- 8. Importance of Time of Supply Tax Liability: The correct determination of the time of supply is essential for calculating the correct amount of GST payable to the government. It helps businesses ascertain when they are liable to pay tax on their supplies. Filing GST Returns: The time of supply also determines the due date for filing GST returns. Accurate reporting and payment of GST are essential to avoid penalties and interest. Input Tax Credit: Businesses rely on the time of supply to claim input tax credits. They can offset the GST paid on purchases against the GST collected on sales. Accurate input tax credit claims help in reducing the overall tax liability. Compliance: Proper understanding and adherence to the time of supply provisions ensure compliance with GST laws and regulations, reducing the risk of legal issues or disputes with tax authorities.