Introduction
The GST rates for certain goods have been amended with effect from 01-Jan-2019. When supply of goods / services happens during such change in tax rate, the 'time of supply' should be determined as per Section 14 of the Central Goods and Services Tax (CGST) Act, 2017 (and not as per the usual provisions of Sections 12 or 13 of the CGST Act). The following table will help assessees to find the 'time of supply' in case of change in tax rate:
How to determine time of supply?
| SUPPLY | ISSUE OF INVOICE | RECEIPT OF CONSIDERATION | TIME OF SUPPLY |
|---|---|---|---|
| Before change in tax rate | After change in tax rate | After change in tax rate | Earlier of: (a) Date of receipt of consideration; or (b) Date of issue of invoice |
| Before change in tax rate | After change in tax rate | Date of issue of invoice | |
| After change in tax rate | Before change in tax rate | Date of receipt of consideration | |
| After change in tax rate | Before change in tax rate | Before change in tax rate | Earlier of: (a) Date of receipt of consideration; or (b) Date of issue of invoice |
| Before change in tax rate | After change in tax rate | Date of receipt of consideration | |
| After change in tax rate | Before change in tax rate | Date of issue of invoice |
How to determine "Date of receipt of consideration"
Date of receipt of consideration = Earlier of: (a) date of receipt entry in supplier's books of account; or (b) date of credit in supplier's bank account.
However, if the credit in bank account happens after four working days from the date of change in tax rate, date of receipt of consideration = date of credit in supplier's bank account. This is primarily to avoid back-dating of entries in the books of account by the supplier to avoid increase in GST rate.
Tax rate to be adopted
Note that the liability to pay tax arises at the 'time of supply'. Hence, the tax rate applicable at the 'time of supply' should be adopted for discharging the tax liability.
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