Time of Supply under Reverse Charge

Time of Supply decides the point of taxation i.e. it determines the time of liability to pay tax under GST. There are different rules for goods and services for Time of Supply under GST which is explained below.

TIME OF SUPPLY FOR GOODS UNDER REVERSE CHARGE

Provisions are different under reverse charge than typical scenario. Time of supply will be the earliest of the below mentioned dates:

  • When the goods are received – the date of receipt.
  • When the amount is paid – the date of payment.
  • Date of payment shall be earliest of ‘The date on which payment has been debited from supplier’s bank account’ Or ‘When the recipient records the payment in his books of account’
  • The date directly after 30 days from the date the supplier issues invoice.

If the assesse has missed in determining the time of supply from the above-mentioned clauses, then the time of supply shall be the date on which recipient enters in his books of account.

For Instance:

Date of receipt of goods – 16th May 2017

Date of Payment – 16th July 2017

Date of Invoice – 1st June 2017

Date of Entry in books by recipient – 18th May 2017

Thus, Time of supply will be – 16th May 2017. If by any chance time of supply could not be determined under mentioned clauses then it will be 18th May 2017, i.e. Date of entry.

TIME OF SUPPLY FOR SERVICES UNDER REVERSE CHARGE

Similarly, provisions are different for services under reverse charge. Time of supply will be the earliest of the below dates:

  • When the amount is paid i.e. the date of payment OR
  • Date of payment shall be earliest of – ‘The date on which payment has been debited from supplier’s bank account’ Or ‘When the recipient records the payment in his books of account’.
  • The date immediately after 30 days from the date the supplier issues invoice.

If the assesse fails to determine the time of supply from the above-mentioned clauses, then the time of supply shall be the date on which recipient of service enters in his books of account.

For Instance:

Date of Payment – 16th June 2017

Date of Invoice – 1st July 2017

Date of Entry in books by recipient – 18th June 2017

Thus, Time of supply will be the date of payment, 16th June 2017. If by any chance, time of supply could not be determined under mentioned clauses then it will be 18th June 2017, i.e. Date of entry.

If the provider is located outside India, then the time of supply shall be the earliest of – ‘When the amount is paid i.e. the date of payment’ OR ‘When the recipient records the payment in his books of account’

 



Author: CA Parul Gupta
Parul Gupta qualified the CA Exams from the Institute of Chartered Accountants of India. She has dealt with many Startups, companies, partnership and proprietorship firms relating to formation and compliance services.

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