Time and value of Supply under GST law
By: – Sanjeev Singhal
Goods and Services Tax – GST
Dated:- 18-11-2016
This chapter will focus on time of supply of goods and services vis a vis valuation of supply which includes goods and services. Both are very significant part of any business vis a vis taxation . Time is important for point of tax that when the liability to pay tax will arise on goods and service . Similarly Valuation on what value the tax shall be levied by Government. For valuing any goods what to include and not to include is subject of big discussion. This has all been incorporated in Section 12,13,14 and 15 of the MGL. Main basis of valuation is transaction value where the parties are not related. Important is when parties are related, what value shall be applied and how the same shall be considered in “Determination of value of supply of Goods and Services Rule,2016.” Let us address the issue one by one.
Time of Supply of Goods
* The liability to pay CG
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scussed above then
* Date of periodical return has to be filed
* Date on which SGST / CGST is paid
Time of supply of services
* The liability to pay CGST and SGST shall arise only at the time of supply of services. Time of supply of services shall be :
* Date of issue of invoice or receipt of payment which ever is earlier if invoice is issued in prescribed time
* Date of completion of services or receipt of payment whichever is earlier if invoice is not raised in prescribed time
* Where the above said clause do not apply, date on which recipient shows the receipt of services in his books.
In case of continuous supply of services ;
* Due date of payment as per the contract whether the invoice is issued or not or any payment has been received or not by the supplier of services
* Where payment date is not mentioned in the contract, issue of invoice or receipt of payment whichever is earlier shall be the time of supply of services.
* Where the payment is linked to comp
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time of supply shall be earliest of the invoice or payment
* Where the invoice is raised before the change of rate of tax and payment is received after the change of rate of tax, date of invoice shall be time of supply.
* Where payment is received before change of rate of tax and invoice is issued after the change of rate of tax, time of supply shall be date of receipt of payment
* In the case of taxable services has been provided after the change of effective rate of tax
* Where the payment is received after the change of rate of tax and invoice is raised before change of rate of tax, time of supply of services shall be date of date of receipt of payment.
* Where the invoice is raised after the change of rate of tax and payment is received before the change of rate of tax , time of supply shall be date of date of invoice.
* Where the invoice is raised and payment is received before the change of rate of tax , time of supply shall be earlier of the invoice or receipt of pay
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y provided linked to the supply
* Any reimbursement of expenses or cost incurred in relation to supply
* Any discount or incentive allowed after the supply has been effected
Transaction value shall not include any discount allowed before or at the time of supply provided such discount allowed as normal course of business and trade practice
In the following situation or circumstances value of supply of goods or services can not be valued as mentioned in point no.1 means thereby “transaction value”
* Consideration is not money
* Supplier and recipient is related
* Reason to doubt the transaction value
* Business transaction done by pure agent, insurer, money changer, air travel agent and distributor or selling agent of lottery
In the above case Rule 4 to 6 of the “Determination of value of Supply of goods and services, Rule 2016 ” shall apply. Same is illustrated below
Determination of value of supply of goods and services Rule,2016
Method of determination of Value [ R
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e depending on place of supply
Computed Value Method [ Rule-5]
If the value could not be computed under Rule-4, it will be computed as follows ;
* Cost of production, manufacturing , processed of the goods or the cost of provision of service
* Add: Charges of brand or design if any
* Add : Amount for profit and general expenses
Residual Method [ Rule -6]
Where the value of goods or supply can not be established under rule 4 & 5 as mentioned above , value shall be determined using reasonable means consistent with the principle and general provision of these rules .
FAQ on Valuation of supply of goods and services
* What is transaction value?
Transaction value refers to price actually paid or payable for supply of goods or services where the supplier and recipient are not related.
Are there separate provision for valuation in SGST,CGST and IGST for goods and service ?
No. Section 15 is common for all three taxes and also common for goods and services.
Is reference to
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