Time, place and value of a supply/transaction made under GST help taxpayers determine the tax rate to be charged. It is important for a taxpayer to know the applicable rate of CGST, SGST and IGST while preparing a GST-compliant invoice. Using these invoices, a taxpayer will be able to file his GST returns accurately.
You can use Razorpay Invoices to create GST-compliant invoices quite easily.
The Goods and Services Tax (GST) has laid down certain rules and provisions regarding the determination of the time, place and value of supply. Let’s understand such rules and provisions in detail through this article.
Time of supply under GST
Time of supply refers to that point of time when goods and services are considered supplied or sold. The time of supply helps a seller identify the due date for payment of his GST liability. The seller must pay CGST/SGST and IGST at the time of supply. The provisions to determine the time of supply are different for goods and services.
The time of supply of goods is the earliest of the following dates:
- Date of issue of invoice
- Date of receipt of payment/advance
- Last date by which an invoice should have been issued
For instance, Mr Raj sold goods worth Rs 50,000 to Ms Puja. He issued an invoice on the 15th of May 2020 and received payment for the same on the 31st of May 2020. The goods were supplied to Ms Puja on the 20th of May.
According to the provisions mentioned above, the time of supply of goods, in this case, will be earlier of the following dates:
- Date of issue of invoice – 15th May
- Date of receipt of payment – 31st May
- Last date by which an invoice should have been issued – 20th May
Therefore, the time of supply of such goods is the 15th of May 2020.
Here’s a point to remember!
GST is not applicable to any advances received by a seller. Tax on advances is payable at the time of issue of an invoice by a seller.
So, if Ms Puja would have given an advance of Rs 20,000 to Mr Raj, the time of supply for such advance would have been 15th of May 2020 only.
Now, let’s understand the time of supply of services in detail.
The time of supply of services is earliest of the following dates:
- Invoice issue date
- Date of receipt of payment/advance
- Date of provision of services (if an invoice is not issued within prescribed time)
For example, Mr Ravi provides services worth Rs 40,000 to Mr Shyam on the 1st of January 2020. The invoice was issued on 20th January and payment was received on the 1st of February.
In such a case, we need to check whether the invoice was issued within the specified time. The specified time is 30 days from the date of supply i.e. by the 31st of January. However, the invoice was issued on the 20th of January which implies it was issued within a prescribed time.
The time of supply will be earliest of the following-
- Date of issue of invoice – 20th January
- Date of receipt of payment – 1st February
This implies that the time of supply of services provided is the 20th of January 2020.
Now, what about the time of supply under reverse charge mechanism?
In case of the reverse charge supply, the time of supply for service recipient is earliest of the following:
- Date of payment
- 30 days from the date of issue of invoice for goods (60 days for services)
Place of supply under GST
Understanding the place of supply of goods and services is very important for a taxpayer to determine the relevant tax to be charged in the invoice. This determines whether a supply is intrastate or interstate.
Let’s begin with the place of supply rules for goods.
|Nature of supply/transaction||Place of supply|
|When goods are sent from one place to another either by the seller or the recipient||The place where such goods are delivered (So, that implies the place of supply of goods is the place where ownership of such goods changes)|
|When there is no movement of goods, either by the seller or the recipient||The place where such goods are located at the time of delivery to the recipient
For instance, when goods are sold in a showroom, the place of supply for such goods is the showroom itself.
|When the goods are assembled or installed at a site||The place where the installation is done|
|When the goods are supplied using a conveyance such as a vessel, an aircraft, a train or any other vehicle||The place where such goods have been onboarded
For instance, Mr Raj is travelling from Bangalore to Delhi by air. He buys a lunch meal for himself. In this case, the food items are loaded into the plane at Bangalore. So, the place of supply for the meal will be Bangalore.
|When the goods are imported into India||The place where the importer is located|
|When the goods are exported from India||The place where the goods are exported. Exports are exempted under GST|
Now, let’s discuss the rules for place of supply for services.
Generally, the place of supply for services is the location of the recipient of services. However, if the recipient is an unregistered dealer and his location is also not available, then the place of supply is the location of the service provider.
In the case of immovable property, the location of the property is the place of supply for any related service.
Value of supply under GST
The amount collected by a seller in exchange for any goods supplied or services provided is referred to as ‘Value of Supply’. If the value is not determined accurately, the GST amount will eventually be calculated incorrectly.
To generate GST-compliant invoices and file your GST returns accurately, you can use Razorpay Invoices and share those invoices with your customers to receive your payment timely.
If you’re wondering how to include profit margins and to get real-time GST inclusive and exclusive rates you can check out our free GST calculator.