The “when, where, and how much” factor plays a key role for taxpayers in understanding the total tax charged. That’s where the discussion of place, time, and value of supply under the goods and services tax comes into being.
The time, place, and possible value of the transaction or supply made under GST assist taxpayers in determining the rate. A taxpayer must understand the rate of SGST, IGST, and CGST when preparing the GST-compliant invoice to file returns more accurately.
Welcome to this post, where you will learn about these three parameters that help you assess your tax value. So, without much delay, let’s get straight to the point.
Understanding Time of Supply under GST: Things to Note
The time for the supply of goods should be earlier than these dates: (1) the invoice issuing date (or the last day when the invoice gets issued) and (2) the data of the receipt.
When a supplier gets Rs.1,000 in excess of their invoice amount, the time for the additional amount will be the date when the invoice was issued. The supply is assumed to be extended by the payment or invoice in case of both the dates (mentioned above). For the second case, the date of receipt of payment shall be earlier than the date when the taxpayer entered payments in the book or the date when the payment was credited to the bank account.
Suppose Savita sold goods worth Rs. 50,000 to Naresh. The seller issued the invoice on May 15, 2020, and got payment on May 31, 2020. The buyer got the supplies on May 20, 2020. As per the provisions, the time of supply in GST here was earlier than these dates:
Invoice Issuing date invoice: May 15
Receipt of payment Data: May 31
Last date for issuing invoice: May 20
Therefore, the time of supply under GST of such goods is May 15, 2020.
Note that GST isn’t applicable to the above purchase. The tax, however, is payable at the time when the invoice was issued by the seller. Thus, when the buyer gave Rs. 20,000 to the seller, the time of supply was made May 15. So, the time of supply of service under GST is the earliest of these dates:
Invoice issue date
Date of receipt of payment
Date of the service provision (in case the invoice has been not issued within the given time)
For instance, let’s assume Shyama offered services to Narendra worth Rs. 40,000 on February 1, 2020. The invoice was issued on February 20, and payment was made on March 1.
In this case, it is imperative to check whether the invoice was issued within a particular time or not. The time is around 30 days. Nevertheless, the invoice was issued on February 20. So, it was issued within the given time. So, the time is the earliest of
Date when the invoice was issued: February 20
Date of payment receipt: March 1
So, it can be stated that the time provided is February 20, 2020.
If you consider reverse charge supply, the ultimate time is the earliest of the payment dates and 30 days from the issued date of the goods’ invoices (i.e., 60 days for the services).
What Should You Learn about GST’s Place of Supply?
A taxpayer needs to determine the tax charged in their invoice. So, they must learn about the place of supply in GST. It evaluates whether the supply is interstate or intrastate.
In general, the place of supply happens to be the location of the recipient of the services. But note that when any recipient is the unregistered dealer, and there’s no availability of locations, the place of supply becomes the service provider’s location. If that’s the case, what should you consider for immovable properties? Well, for these properties, the location is the place of supply for the related service.
GST’s Value of Supply: Ins and Outs to Learn
Now, coming to the last part of this post: the value of supply under goods and services tax. An amount is collected by the seller in exchange for services or goods provided. This amount is better regarded as the value of supply under GST. When the valuation of supply under GST isn’t evaluated accurately, the amount of GST cannot be calculated accurately.
According to the laws, the value on which GST is charged must be a transactional value. So, the taxpayer must ensure that the GST is properly changed even when their payment isn’t paid completely.
FAQs
What is the rule for POS in GST?
POS is the place of supply in GST. If the location of the recipient of goods or services is not available, the POS is considered as the supplier’s location.
Why does a taxpayer need to give importance to time, value, and place of supply?
A taxpayer who is eligible for GST filing should give importance to the time, value, and place of supply. These three elements play a critical role in assessing the tax rate under the GST rule. The fact is that taxpayers must understand the relevant rates for SGST, IGST, and CGST in order to ensure compliance while preparing for the invoices.
What are SGST, IGST, and CGST?
SGST is the State Goods and Services Tax. Under GST, SGST is an equivalent amount on intrastate supplies of both services and goods by State Government in areas where sold products are consumed.
The next comes the IGST, which is the Integrated Goods and Services Tax. IGST is the tax levied on interstate supplies of services and goods (or two or more Union Territories or states). The last one is CGST (Central goods and services tax), by the central government on intrastate movements of services and goods (transactions within a state).
What do you mean by value and time of goods?
It means the time when it is considered the supply of services or goods. When a seller knows the time, it helps them recognize their due date for tax payments.