What is Time of Supply in case of change in rate of tax under GST?
In GST scenario, changes in the rate of taxes are quite frequent. Due to this, there may be situations wherein the GST rates are different at the time of actual supply of goods and different at the time of receipt of payment. In this article, we will discuss implications of these rate changes on the ‘Time of Supply’ and consequently the tax rate applicable to the taxpayer.
Case-I: When goods or services has been supplied before the change in tax rate:
|
Invoice issued |
Payment Received |
Time of Supply |
|
Before change in rate |
After change in rate |
Date of Invoice |
|
After change in rate |
After change in rate |
Date of invoice or Date of Payment, whichever is earlier |
|
After change in rate |
Before change in rate |
Date of payment |
Case-II: When goods or services has been supplied after the change in tax rate:
|
Invoice issued |
Payment Received |
Time of Supply |
|
Before change in rate |
After change in rate |
Date of payment |
|
Before change in rate |
Before change in rate |
Date of invoice or Date of Payment, whichever is earlier |
|
After change in rate |
Before change in rate |
Date of Invoice |
Note: It is to be noted that effect of Notification No. 66/2017- CT dated 15-11-2017 which exempts levy of GST on advance receipts of payment shall continue to prevail in the above situations also.
Meaning of Date of receipt of payment
In normal circumstances, ‘Date of receipt of payment’ shall be the date on which the payment is entered in the books of accounts of the supplier or the date of credit in the bank account, whichever is earlier. But in the case of change in rax rate, special definition is assigned to it.
In this case, ‘Date of receipt of payment’ shall be the date of credit in the bank account if such credit in the bank account is after 4 working days from the date of change in the tax rate. This provision has been made to avoid the intentions where in the case of rate change, the taxpayer might show early receipt of payment by cheque though actually cheque is deposited in bank and credited in the account too later.
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Time of Supply of services under GST
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