GST Posts

Time of Supply in case of Change in GST Rate

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?

SUPPLYISSUE OF INVOICERECEIPT OF CONSIDERATIONTIME OF SUPPLY
Before change in tax rateAfter change in tax rateAfter change in tax rateEarlier of: (a) Date of receipt of consideration; or (b) Date of issue of invoice
Before change in tax rateAfter change in tax rateDate of issue of invoice
After change in tax rateBefore change in tax rateDate of receipt of consideration
After change in tax rateBefore change in tax rateBefore change in tax rateEarlier of: (a) Date of receipt of consideration; or (b) Date of issue of invoice
Before change in tax rateAfter change in tax rateDate of receipt of consideration
After change in tax rateBefore change in tax rateDate 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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Srinivasan V, Advocate

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