Goods & Services Tax – Place & Time of Supply

Place & Time of Supply

Goods & Services Tax (GST) was introduced as The Constitution (101stAmendment) Act 2016, following the passage of Constitution 122ndAmendment Bill and is governed by GST Council and its Chairman being the Finance Minister of India – Shri. Arun Jaitley. India launched its biggest ever Indirect Tax regime – GST, thus being rolled out from 1st July, 2017 coinciding with the Foundation day of ICAI. The constitution defines “Goods and Services Tax” as any tax on supply of goods, or services or both, except for taxes on the supply of the alcoholic liquor for human consumption. It primarily aims at streamlining the indirect taxation structure in India, replace the many taxes into a singular levy, redefineand simplify taxation procedure.

Time of supply, Place of supply, Value of supply are the 3 fundamental pillars of GST that determine the chargeability of taxes on supply

Time of Supply

The GST law has provided separate provisions to determine the time of supply of goods and time of supply of services.

TIME OF SUPPLY OF GOODS

  1.  Supply under Default Rule: Earliest of
    •Date of issue Invoice/ Last date of issue of invoice
    •Date of receipt of payment
  2. •Supply under Forward Charges: Earliest of

    •Date of issue Invoice/ Last date of issue of invoice
    •Date on which payment is recorded in books of supplier
    •Date on which payment is credited to suppliers  bank account
  3. •Supply of Vouchers exchangeable: Earliest of

    •Supply is identifiable – Date of issue of voucher
    • Supply is not identifiable – Date of redemption of voucher
  4. •Supply Residual provisions: Earliest of

    •Periodical return has to be filed – Due date of filing of return
    •In all other cases – Date of payment of tax
  5. •Supply related to addition  in value: Earliest of

    •Date on which supplier receives such addition in value

Ex: Firm ‘A’ receives an advance of Rs. 2,500/- on 29.07.17 for goods worth Rs. 10,000/- to be supplied in the month of September, then it is deemed that firm ‘A’ has made a supply of Rs. 2,500/- on 29.07.17 and tax liability on Rs. 2,500/- is to be discharged by 20.08.17.

TIME OF SUPPLY OF SERVICES

  1. Supply under Default Rule: Earliest of

    •Invoice issued within time limit – Date of issue of invoice /Date of receipt of payment
    •Invoice is not issued within time limit – Date of provision of services  /Date of receipt of  payment
    •Other cases – Date on which the recipient shows the receipt of service in his books of account
  2. Supply under Forward Charges: Earliest of

    •Invoice issued within time limit –  Date of issue of invoice /Date on which payment in recorded in books of supplier/Date of  credit of payment  in suppliers bank account
    •Invoice is not issued within time limit – Date of provision of services  / Date on which payment in recorded in books of supplier/Date of  credit of payment  in suppliers bank account
    •Other cases – Date on which the recipient shows the receipt of service in his books of account
  3. Supply of Vouchers exchangeable: Earliest of

    •Supply is identifiable – Date of issue of voucher
    •Supply is not identifiable – Date of redemption of voucher
  4. Supply Residual provisions: Earliest of

    •Periodical return has to be filed – Due date of filing of return
    •In all other cases – Date of payment of tax
  5. Supply related to adddition in value: Earliest of

    •Date on which supplier receives such addition in value

Ex: 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 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.

ISSUE OF INVOICE FOR SUPPLY OF GOODS

  1. Supply Involving Movement of Goods: Issue at the time of removal
  2. Supply Involving No Movement of Goods: Issue at the time of delivery
  3. Sale or return of supplies: Issue before the time of supply, or within 6 months from the removal – whichever is earlier

ISSUE OF INVOICE FOR SUPPLY OF SERVICES

  1. Normal Services: Issue within 30 days of supply of services
  2. Insurance & Banking Services: Issue within 45 days of supply of services

Place of Supply

Under GST, it is essential to know the Place of Supply to determines which type of GST is to be paid, whether IGSTCGST or SGST and how the dealers have to account for Input Tax Credit on purchase and Output Tax on sale.

Place of Supply for Goods other than Imports and Exports (Section 10)

  1. Supply involves movement of Goods: Location of Delivery of Goods
  2. Supply without movement of Goods: Location of Goods
  3. Supply on directions of a 3rd person: Location of the 3rd persons
  4. Supply on board a conveyance: Location at which the goods were taken on board
  5. Goods assembled or installed at site: Place of assembly or installation

Place of Supply for Goods in case of Imports &Exports (Section 11)

  1. Imports: Location of the importer
  2. Exports: Location outside India

Place of Supply of Services in case of Domestic Supplies (Section12)

  1. Services directly relating to Immovable Property located in India: Location of Immovable Property
  2. Restaurant and catering services, personal grooming, fitness, beauty treatment and health service: Location where services are actually performed
  3. Training and performance appraisal: B2B: Location of such Registered Person ,  B2C: Location where the services are actually performed
  4. Admission to an event: Where the Event is held
  5. Organisation of an event: B2B: Location of such Registered person. B2C: Location where the event is actually held.If the event is held outside India: Location of the recipient
  6. Transportation of goods, including mails: B2B: Location of such Registered Person, B2C: Location at which such goods are handed over for their transportation
  7. Passenger transportation: B2B: Location of such Registered Person
    B2C: Place where the passenger embarks on the conveyance for a continuous journey
  8. Service on board a conveyance: First scheduled point of departure
  9. Insurance service: B2B: Location of such Registered Person
    B2C: Location of the recipient of services on the records of the supplier
  10. Services supplied by a Banking & Non-Banking Financial Institutions to account: Location of the recipient of services on the records of the supplier,Location of the supplier of services if the location of the recipient of services is not available
Default Provision
  1. B2B: Location of such Registered Person
  2. B2C: Location of the recipient where the address on record exists, Location of the supplier of services in other cases

Place of supply of services in case of cross-border supplies (Section 13)

  1. Services supplied for goods that are required to be made physically available from a remote location by way of electronic means: Location where the services are actually performed
  2. Services supplied to an individual and requiring the physical presence of the receiver: Location where the services are actually performed
  3. Online information and database access or retrieval services: Location of recipient of service
  4. Immovable property-related services, including hotel accommodation: Location at which the immovable property is located
  5. Banking, financial institutions, NBFC Intermediary services, hiring of vehicles’ services,  etc: Location of the supplier of service
  6. Transportation of goods: Destination of the goods
  7. Passenger transportation: Place where the passenger embarks on the conveyance for a continuous journey
  8. Services on-board a conveyance: First scheduled point of departure of that conveyance for the journey.