Time and Place of Supply under GST
Understanding the rules of Time and Place of Supply under GST helps the supplier determine when and how much tax is to be paid. Knowing the place of supply rules, suppliers can understand whether it is counted as inter-state, intra-state sales according to which CGST, SGST, & IGST are levied. Knowing the time of supply rules, suppliers can understand when to pay the taxes and when the taxes are due. Hence, knowledge about time and place of supply under GST is important.
Time of supply
As to calculate, as well as release the tax liability from one’s court, it is essential to know the date at which the product or service has been provided. In GST terms it is called Time of Supply.
As supply can be of both goods and services, the GST council has well defined Time of Supply for both goods and services. The date on which the value (of product or service) is entered in the books of accounts or the date on which the payment is credited (whichever is earlier) is considered to be the date of supply.
The Time of Supply is divided into two parts that are:
- Time of Supply of Goods
- Time of Supply of Service
Furthermore, these two are categorized into different parts such as-
-Under forward Charge
-Under Reverse Charge
– Supply of vouchers
The supply consists of elements such as purchase order/ agreement, dispatch (of goods), delivery (of goods), provision or performance of service, an entry in the records, payment, entry of the payment in the records, and deposit in the bank.
Supply of Goods
The rules pertaining to the supply of goods are explained below:
1. Time of Supply under forward charge is considered in a condition where the Date of issue of invoice, the Date on which the payment is recorded in the books of account of the supplier, or the date on which the payment is credited to the supplier’s bank account (whichever is early)
2. Time of Supply under reverse charge is considered in a condition where the date on which goods are received,/ date on which the payment is recorded in the books of account of the recipient of goods,/ date on which the payment is debited from the bank account of the recipient of goods/ 31st day from the issue of invoice by the supplier (whichever is earlier). In case it is not possible to determine the time of supply via the above parameters then the time of supply will be the date on which goods are recorded in the books of account of the recipient.
3. Time of supply of vouchers which are exchangeable for goods is categorized into two sections, that is Food Pass & another coupon. The only difference between them is that the supply is not identifiable at the time of issue of the food voucher whereas, in the case of the other, the supply is identifiable. For the food vouchers, the date of redemption is considered and the date of issue is considered for the second.
4. Time of supply of residual case depends upon the two conditions, for periodic return date on which return is to be filed and for another case, the date on which GST is paid.
Supply of Services
The rules pertaining to the supply of services are explained below:
- Time of supply under forwarding charge depends upon the answer given with respect to the question (Is invoice issued within the time specified u/s 31 (2)?). If one states ‘Yes’ the date of issue of invoice/ date on which the payment is recorded in the books of account of the supplier/date on which the payment is credited to the supplier’s bank account (whichever is earlier) and in case if one states ‘No’ then date of provision of service/ date on which payment is recorded in the books of account of the supplier or the date on which the payment is credited to the supplier’s bank account (whichever is earlier).
- Time of supply of services under reverse charge depends upon the date on which the payment is recorded in the books of account of the recipient of service/date on which the payment is debited from the bank account of the recipient of services/ 61st day from the issue of invoice by the supplier (whichever is earlier).
- Time of supply of voucher which is exchangeable for services is stipulated as the date of issue of voucher/ if supply is identifiable / date of redemption the voucher
- Time of supply under the residual case is either the date on which periodic return for the period is required to be filed or, the date on which GST is paid.
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Place of Supply
Goods and Service Tax (GST) as we know is a destination-based tax. This determines that the place where the product or service is consumed is considered to be taxed and not the origin of the product or service. This concept, that is, Place of Supply stands as a crucial aspect as transactions are counted based upon whether it’s Intrastate or Interstate.
The place of supply of goods under GST is explained in Section 10. Place of supply is categorized under 5 major headings, that is, Supply involves movement of Goods, Goods supplied on the instructions of the third party, Supply which does not involve movement goods, Goods which are installed at the site, and Goods supplied on board conveyance.
Part 1 Supply involves movement of Goods Section 10 (1)(a)
- If goods are supplied by supplier and the place from where the goods are removed (for example is in Kerala) and the place of supply (for example is in Assam) henceforth IGST will be levied at Kerala
- If goods are collected by the recipient and the place from where the goods are removed (for example is Kerala) and the termination of the moment of delivery & place of supply (for example is Goa)
Part 2 Goods supplied on the instructions of the third party
- If the location of the supplier is Ahmedabad, the Place of delivery is in Ahmedabad too but the place where the instructor is at Amritsar then the taxation for the supplier will be accounted for in Amritsar (that is, the type of tax payable by the supplier will be IGST at Ahmedabad)
- In another case, if the location of supplier and place of delivery is in Ahmedabad and the Principal place for a person who instructed delivery in Amritsar. Then the place supply for the person who instructed is Ahmedabad and the tax levied for the person who instructed is IGST at Punjab.
Part 3 Supply which does not involve movement of goods, Section (10) (c)
- In a condition where there is the sale of pre-installed DG set where the location of supplier is Delhi and location of recipient, goods, place of supply is Bhopal. The tax payable will be IGST at Delhi
Part 4 Goods which are installed at the site, Section 10 (1) (d)
- In a condition where the installation of the bridge has to be carried out where the location of supplier is at Delhi and the place of supply, Installation site, the registered office of the recipient is at Bhopal, then the tax payable will be IGST at Delhi.
Part 5 Goods supplied on board conveyance, Section 10 (1) (e)
- In a condition where the supply of canned aerated drinks on a flight has to be done where the location of the supplier, loading of goods, & place of supply is at Punjab but the passenger boarded at Delhi, then tax payable will be CGST+ State GST
Apart from all these above cases, if the Goods are imported then IGST will be levied. The point of taxation will be the duties that will be levied on the goods and the value of the product will be determined as per the Customs Act.
The Place of Supply of services can be determined by two major aspects such as – the location of the recipient of services and the location of the supplier of services.
The supply is received by the receiver & provided by the service provider at the following place:
- When the supply has been received at a registered place
- Supply is received other than the place of business registration
- It is received from more than one establishment
- Where the supply has an absence of place, that is the location of the usual place of the resident of the recipient.
The supplies are Intra-state, Inter-state, and International. Generally, the first two places of supply of service will be the location of the service recipient (where the recipient is a registered person) whereas the place of supply of service will be the location of the service recipient or the location of the Service Provider. In the case of the third aspect of service supply, the location of the recipient of the location of the supplier will be applied suitably.
Terms under Time and place of Supply under GST
- Vouchers: They have been identified as an instrument, where there is an obligation to accept as consideration or part of the consideration for the supply of services or goods.
- Reverse Charge Mechanism: This is the process in which the receiver becomes liable to pay the tax.
- Continuous Supply of goods or services: This means there is a recurrence as suppliers send invoices within a set period of time or there is some type of contact which is signed up. In another case, supply will be via means of wire, pipeline, or any other conduct.
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The Time and Place of Supply under GST rules differ for these types of services. The services that cover the below conditions:
- When delivery is carried through the internet
- And the supply of information is done only via the usage of information technology
Some of the services which include OIDAR are: Providing data or information, providing e-books or movies, cloud-based services, etc.
The difference between OIDAR and Non-OIDAR should be taken care of. Services such as the supply of physical books, newsletters, ticket booking, services of lawyers,s, etc are not considered to be OIDAR.
The supplier who is located outside India needs to appoint a person who is residing in India or should get himself registered under GST. At the same time, the person receiving such services is supposed to pay IGST to the government (given that he is registered under GST). Reverse charge is also applicable for the registered person.
The place of supply of it is the location of the recipient. The location of the recipient is determined by the following points:
- The IP address of the recipient
- The address of the billing
- The Bank or credit/ debit card details of the recipient of services
- Landline number details
Businesses face a continuous challenge in updating themselves and following laws related to time and place of supply under GST. By being in touch with experts like HA, you will get to know about these very easily.
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