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In today’s article, we will discuss the Point of Taxation. We all know about taxable events i.e. any event, the occurrence of which results in the liability to pay tax. Under previous laws of indirect tax laws, manufacture, sales, provision of services etc. were known as taxable events. However, under GST all these events are summed up in the definition of supply. Taxable event under GST will include any supply of any goods and services or both in course for the furtherance of a business.
Another concept to be clarified is regarding ‘point of taxation’, we know what taxable event is, but the point in the course of this transaction where these goods or services are to be taxed is known as the point of taxation.
As per CGST Act, 2017, it clearly specifies that the liability to pay tax on goods as well as on services arises at the time of supply for traders who have got their GST Registration done.
Now the important thing is to determine what is ‘time of supply’. Section 12 and Section13 define what time of supply is, in reference to goods and services respectively.
First, let’s discuss the point of taxation i.e. time of supply of goods. Section 12 of the Act states the following provisions regarding the determination of time of supply;
Here, the criteria is that the earliest of the following will be considered at the time of supply:
In the case of Reverse Charge
The second discussion is regarding goods on which tax is paid or is liable to be paid on reverse charge basis. In such cases, the time of supply will be earliest of the following:
3. Date immediately following 30 days from the date of issue of invoice or any other document issued in lieu of it by the supplier.
If it can’t be determined based on these given dates, then the date of entry of supply in the books of accounts of the recipient will be considered as the time of supply.
In the case of voucher
If any person is engaged in the supply of vouchers, then they have different criteria regarding the determination of the time of supply as they are different in nature as compared to other goods. These criteria are:
In case of services, the time of supply is to be determined based on the following conditions;
Time of supply will be the earliest of the following:
Here this date will be the earliest of the following:
3. In case of point 1 and 2 don’t apply, date of receipt of services shown in the books of accounts of the recipient.
In case of reverse charge
In the case of the supply of services on which the tax is paid or is liable to be paid on the reverse charge basis, the time of supply (point of taxation) will be the earliest of the following:
When such payment is entered in the books of accounts of the recipient.
When the bank account of the recipient is debited with the payment amount.
2. Date immediately following 60 days from the date of issue of invoice or any other document issued in lieu of it by the supplier.
However if such supply of services is affected by any associated enterprise located outside India, then the time of supply will either be the date of entry of supply in the books of the accounts of the recipient or the date of payment, whichever is earlier.
In case of vouchers
Here the time of supply is determined in exactly the same way as it was done in the case of goods. The following dates will be considered as the date of supply:
In the case of non-determination of such time of supply of goods or services based on the criteria discussed in the given headings, the following dates can be considered as the time of supply:
In Case of Increase in the Value of Supply of Goods or Services
If there is an increase in the value of supply, then the given principles are to be followed in order to determine the time of supply. Such an increase in the value of supply can be because of any two reasons:
It may be noted that the point of taxation under GST will arise at the time of supply as determined for goods/services. Different provisions apply in case of time of supply of goods and time of supply for services. For any additional information about GST India or GST Registration, contact Enterslice.
Read our article:Filing of Form GST ITC-03: All you need to know
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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