INCOME TAX NOTES

TIME AND VALUE OF SUPPLY Section 12 to 15 Chapter IV

(1) Liable:  The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section

(2)Time of supply all cases: The time of supply of goods shall be the earlier of the following dates, namely:—
    a. the date of issue of invoice by the supplier or the last date on which he is required, under sub-section (1) of section 31, to issue the invoice with respect to the supply; or
    b. the date on which the supplier receives the payment with respect to the supply:

Provided that where the supplier of taxable goods receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice in respect of such excess amount.

Date of supply which ever is earlier:
Invoice issue ( Section 31(1) - before or at the time of removal)
or 
Payment (earlier of entry in account or credited to bank)

Provided :option of Supplier under Transaction Upto Rs 1000/- 


Notification



Explanation 1.–– For the purposes of clauses (a) and (b), “supply” shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment.
Explanation 2.–– For the purposes of clause (b), “the date on which the supplier receives the payment” shall be the date on which the payment is entered in his books of account or the date on which the payment is credited to his bank account, whichever is earlier.

(3) Reverse Charge: In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earliest of the following dates, namely:—
   a. the date of the receipt of goods; or the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or
   b. the date immediately following thirty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the time of supply shall be the date of entry in the books of account of the recipient of supply.
Reverse Charge  Time of supply is earlier of:
a. Date earlier of Goods receipt or books entry or Bank debit
or
b. 30 days from the date of invoice

provided if not possible apply above condition then book entry is the time of supply

Reverse Charge time of supply is:

Before 30 days of issue invoice
After 30 days of issue invoice
Date Earlier of three
Date Earlier of four
a. Goods Receipt
a. Goods Receipt
b. Book Entry
b. Book Entry
c. Bank Debit
c. Bank Debit

d. Invoice issue + 30 Days
Provided if not possible then date of book entry is time of Supply


(4) Voucher:  In case of supply of vouchers by a supplier, the time of supply shall be—
   a. the date of issue of voucher, if the supply is identifiable at that point; or 
   b. the date of redemption of voucher, in all other cases. (if not Identifiable)
Date Issue of Voucher - If Supply is Identifiable (example - Voucher for purchase of TV)
Date Redemption of voucher - not Identifiable (example - Voucher for any goods)

(5) Not Possible to Determine : Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4), the time of supply shall––
   a. in a case where a periodical return has to be filed, be the date on which such return is to be filed; or (return filling Date)
   b. in any other case, be the date on which the tax is paid. (date when tax is Paid)

(6) Uncertain Income : The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value.
Date of income Receives

Section 13 Time of supply of Service


Section 13:
(1) Liable:  The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of this section.

(2) Time of supply all cases:  The time of supply of services shall be the earliest of the following dates, namely:—
   a. the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or

   b. the date of provision of service, if the invoice is not issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or

   c. the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not apply:

Which ever is earlier : in simple language
a. Date of invoice (only if issue within 30 days of POS) / Provision of service (POS) or 
b. date of payment or 
c. entry in books of account

Provided that where the supplier of taxable service receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice relating to such excess amount
Explanation.–– For the purposes of clauses (a) and (b)––
   (i) the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment;
   (ii) “the date of receipt of payment” shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.

(3) Reverse Charge: In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earlier of the following dates, namely:––
   a. the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or
   b. the date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b), the time of supply shall be the date of entry in the books of account of the recipient of supply:
Provided further that in case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment, whichever is earlier.

(4) Voucher: In case of supply of vouchers by a supplier, the time of supply shall be––
   a. the date of issue of voucher, if the supply is identifiable at that point;  or
   b. the date of redemption of voucher, in all other cases.
Date Issue of Voucher - If Supply is Identifiable (example - Voucher for Servise of RO service)
Date Redemption of voucher - not Identifiable (example - Voucher for any Service)


(5) Not Possible to Determine : Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4), the time of supply shall––
   a. in a case where a periodical return has to be filed, be the date on which such return is to be filed; or (return filling Date)
   b. in any other case, be the date on which the tax is paid. (date when tax is Paid)

(6) Uncertain Income : The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value.

Section 14 Change in rate of tax in respect of supply of goods or services


Section 14:
Notwithstanding anything contained in section 12 or section 13, the time of supply, where there is a change in the rate of tax in respect of goods or services or both, shall be determined in the following manner, namely:––

a. in case the goods or services or both have been supplied before the change in rate of tax,––

   (i) where the invoice for the same has been issued and the payment is also received after the change in rate of tax, the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; or

   (ii) where the invoice has been issued prior to the change in rate of tax but payment is received after the change in rate of tax, the time of supply shall be the date of issue of invoice; or

   (iii) where the payment has been received before the change in rate of tax, but the invoice for the same is issued after the change in rate of tax, the time of supply shall be the date of receipt of payment;

b. in case the goods or services or both have been supplied after the change in rate of tax,––

   (i) where the payment is received after the change in rate of tax but the invoice has been issued prior to the change in rate of tax, the time of supply shall be the date of receipt of payment; or

   (ii) where the invoice has been issued and payment is received before the change in rate of tax, the time of supply shall be the date of receipt of payment or date of issue of invoice, whichever is earlier; or

   (iii) where the invoice has been issued after the change in rate of tax but the payment is received before the change in rate of tax, the time of supply shall be the date of issue of invoice:

IN OTHER WORD SHOWS IN TABULAR FORM 
Supply of Goods or Service or Both (GS)


Before Change Rate
After chage rate
time of supply
1a
GS
Invoice and Payment
Earlier of invoice or Payment
1b
GS or invoice
Payment
Invoice date
1c
GS or Payment
Invoice
Payment Date
2a
Invoice
GS or Payment
Payment Date
2b
Invoice and Payment
GS
Earlier of invoice or Payment
2c
Payment
GS or invoice
Invoice date

Provided that the date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after four working days from the date of change in the rate of tax

Explanation.–– For the purposes of this section, “the date of receipt of payment” shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.

Section 15 Value of taxable Supply


Section 15:
(1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply.
Transaction Value actual price paid or payable

(2) The value of supply shall include–––

   a. any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier;
All include except GST

   b. any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both;
Value of Taxable Supply is amount paid or payable by buyer
Sales price + all expenses - discount = Buyer paid

   c. incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services;

Incidental expenses like 
i. advertising or publicity, 
ii. marketing and selling organization 
iii storage, 
iv. outward handling, 
v. servicing, 
vi. warranty including commission and packing shall form part of transaction value.

   d. interest or late fee or penalty for delayed payment of any consideration for any supply; and

   e. subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments.
Explanation.–– For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy.

 interest or late fee or penalty for delayed payment, subsidies include in taxable Supply (gst liable)
Exclude subsidies provided by CG and SG
Explanation if subsidy include in sales value then it is taxable ( GST Liable)

(3) Value of supply Not Include:
 The value of the supply shall not include any discount which is given––
   a. before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and
   b. after the supply has been effected, if—
      (i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and
      (ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply.
Taxable supply - Discount (only if below condition satisfied)
a. at the time of supply recorded in Invoice
b. after supply
   1. term of sale when invoice issue
   2. Discount is conditional at the time of sale then the disconut ITC claimed with the help of credit Note.

(4) Where the value of the supply of goods or services or both cannot be determined under sub-section (1), the same shall be determined in such manner as may be prescribed

(5) Notwithstanding anything contained in sub-section (1) or sub-section (4), the value of such supplies as may be notified by the Government on the recommendations of the Council shall be determined in such manner as may be prescribed.

Explanation.— For the purposes of this Act,––
persons shall be deemed to be “related persons” if––
   (i) such persons are officers or directors of one another’s businesses;
   (ii) such persons are legally recognised partners in business;
   (iii) such persons are employer and employee;
   (iv) any person directly or indirectly owns, controls or holds twenty-five per cent. or more of the outstanding voting stock or shares of both of them;
   (v) one of them directly or indirectly controls the other;
   (vi) both of them are directly or indirectly controlled by a third person;
   (vii) together they directly or indirectly control a third person; or
   (viii) they are members of the same family;
the term “person” also includes legal persons;
persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related.