written by Khatabook | November 15, 2021

Time, Value & Place for Supply for Goods & Services under GST

A taxable event in the Goods and Services Tax (GST) system is known as supply. Sale, transfer, renting, exchange, barter, lease, licensing, and disposal are all examples of supply in GST. If a person engages in either of these activities for a fee in the course or furtherance of their business, they will be covered by supply in GST. Therefore, let's delve into the details of GST supply with respect to time, value and place.

When are transactions considered to be supply in GST?

Any transaction that passes the following elements can be considered as a supply under the GST regime:

  1. It must be a business-related activity 
  2. It must be done in the course of business.
  3. It must incorporate some form of consideration.

The transaction can be classified as a supply under the GST regime if all three elements are met.

1. Time of Supply under GST

In the GST regime, the Time of Supply is important to know when to tax after transactions. It refers to the point at which the products or services are believed to have been delivered. Section 12 of the GST Act talks about the Time of supply of Goods, whereas Section 13 talks about the Time of supply of Services.

Section 12- Time of Supply of Goods

According to Section 12 of the GST Act, 2017, the time of supply of goods is the earliest of the following: 

  • The date on which the supplier issues an invoice, 
  • The last date on which he is obliged to issue an invoice.
  • The date on which the supplier receives the payment.

E.g., Mr X sold Mr Y Rs. 10,000 worth of items. The invoice was sent out on March 15th. On March 31st, the payment was received. On March 20th, the goods were delivered. Because the invoice issue date was earlier than the last day for invoices to be issued, the time of supply in this situation will be the 15th of March.

In the case of the Reverse Charge Mechanism, the time of supply is the earliest of the following:

  • The date of receipt of goods, or
  • The date on which payment is deducted from a bank account or the date on which payment is registered in books of accounts, whichever comes first, or
  • The day that occurs 30 days after the supplier's invoice is issued.

Section 13- Time of Supply of Services under GST

As mentioned in Section 13 of the GST Act, 2017, the time of supply of services is the earliest of the following:

  • Date of invoice issuance (if invoice issuance is within the time limit), or
  • Date of service provision (if the invoice is not issued within the time limit), or
  • The date on which the advance or payment was received

E.g., Mr P provided services worth Rs.100000 to Mr Q on 19th June. The invoice was issued on 20th June. The payment was received on 2nd July. Now the time of supply, in this case, shall be 19th June as it is earliest.

In the case of the Reverse Charge Mechanism, the time of supply is determined as follows:

  • Date of payment as entered in books of accounts of recipient or date when his or her account is debited, whichever is earlier, or
  • Date immediately following 60 days from the date of issue of invoice by the supplier.

2. Value of Supply of Goods & Services 

Value of supply is ascertained by the transaction value, which is defined as the price paid or payable for the transaction when the supplier and the recipient are unrelated. The price is the sole consideration of supply.

The following shall also be included in the Value of Supply:

  1. Incidental Expenses charged by the supplier to the recipient such as Commission and Packing
  2. Any amount charged by the supplier for anything done in respect of the supply
  3. Any interest, late fees, or penalty due to delayed payment of consideration
  4. Subsidies that are directly linked to the price excluding those which are provided by Central Government and State Government.
  5. Taxes, cesses, duties, fees under any other law except GST if charged separately by the supplier
  6. Amount incurred by the recipient and not included in the price which is actually payable by the supplier

Also Read: List Of Goods Exempted Under GST in India with HSN Code

Let us take an example of the Value of Supply:

ABC Pvt Ltd provided the following details of goods sold to XYZ Ltd-

Particulars

Amount

The list price of goods (exclusive of discount & taxes)

60000

Tax levied by Municipal authority

6000

Packing Charges

2000

ABC Pvt Ltd receives 5000 as a subsidy from an NGO. The above price of 60000 is after considering the subsidy. It also offers a discount of 5% on the list price of goods recorded in the invoice for the goods.

Now the Taxable Value of Goods shall be-

Particulars

Amount

List price

60000

Tax levied by Municipal Authority

6000

Packing Charges

2000

Subsidy received from Government

5000

Total

73000

Less: Discount of 5% on 60000

3000

Value of Supply

70000

3. Place of Supply under GST

Place of Supply is a significant factor to know whether the supply is Inter-State or Intra-State Supply.

The tax is levied based on the location of supply. If the supply is made inside a state, the tax will be paid as Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST). If the supply is made between states, the tax will be paid as Integrated Goods and Services Tax (IGST). 

If the tax is paid under the incorrect head, for example, if the tax was supposed to be paid as IGST but was instead paid as CGST and SGST owing to a miscalculation, there is no mechanism under the GST to remedy such errors suo moto. The person's sole option is to pay the tax in the proper account and receive a refund for the tax paid in the incorrect account.

The purpose of the place of supply provisions is two-fold: 

1) In the case of cross-border transactions, to determine whether tax is to be levied on a particular transaction 

2) In the case of domestic transactions, to determine whether a particular transaction is an inter-state supply or an intra-state supply.

What is Inter-State Supply? Inter-state supply is when the “location of supplier” and “place of supply” are not in the same state or Union territory.

What is Intra State Supply? Intra-state supply is when “location of supplier” and “place of supply” are in the same state or Union territory.

The provisions have been broadly divided into two categories:

Section 11 - Supplies which are Imports or Exports 

Section 10 - Supplies other than Imports and Exports

Transactions are further divided into some broad categories, which are illustrated as under:

Import & Export (Section 11)- It includes Import & Export.

Other (Section 10) – It includes 

  • On the direction of the third person
  • No movement of goods
  • Goods are assembled
  • Supplied on Board

Section 11: Place of Supply for Import & Export

Imports- Imports are goods that are brought into the country from another country. The importer's location will be the point of supply for commodities imported into India.

Exports- The location outside India will be the site of supply for products exported from India.

Section 10: Transactions other than Import or Export 

1) Goods Movement-

When a supply involves the movement of goods, the location of the items at the moment the movement of goods ends for delivery to the receiver is the site of supply of such goods.

2) “Bill to Ship to” Process-

When goods are delivered by the supplier to a recipient (ship to) or any other person on the direction of a third party (bill to), whether acting as an agent or otherwise, the said third party is deemed to have received the goods, and the place of supply of such goods is the said third person's principal place of business.

3) No Movement of Goods- 

Where the supply does not involve the movement of goods, the place of supply shall be the location of such goods at the time of the delivery to the recipient

4) When Goods are Installed- 

Where the goods are assembled or installed at the site, the place of supply shall be the place of such installation or assembly

5) Goods on Board a conveyance- 

The point of supply for commodities provided on board a conveyance, such as a vessel, an aeroplane, a train, or a motor vehicle, is the site where the items are brought on board."

Place of Supply of Services

The Place of Supply is the location of the service recipient. The location of a supply received at a place of business for which registration has been acquired is the place of business. If a supply is received at a location other than the place of business for which registration has been acquired (a fixed establishment elsewhere), the location is the place of business. 

The rules related to the place of supply can be described as follows - 

(1) The place of supply of services is liable except for the services mentioned in the below points:

  1. Made to a registered person-  location of such person,
  2. Made to any person other than a registered person,
  3. Location of the recipient where the address on record exists,
  4. Location of supplier of services in other cases.

(2) The place of supply of services-

  1. Directly in relation to immovable property,
  2. A club, a guest house, a hotel, an inn, a homestay, or a campground as a place to stay,
  3. By way of lodging in any moveable property to plan a wedding or celebration,
  4. Any services are ancillary to the services mentioned above,

shall be the location at which the immovable property or boat or vessel, as the case may be, is located or intended to be located. Still, if it is outside India, then the recipient's location will be considered the place of supply.

(3) In the case of the following services, the place of supply shall be the place where the services are actually provided - 

  • Personal Grooming
  • Beauty Treatment
  • Health and fitness services
  • Cosmetic and Plastic Surgery
  • Restaurant and Catering Services

(4) Services relating to performance appraisal and training, if provided to a registered person, the place of supply will be the location of such person; otherwise, it will be the place where the services are actually performed.

(5) The location where passenger transportation services are provided to,

(a) A registered person's location shall be such person's location;

(b) A person who is not registered is the person who is in charge of the location where the passenger boards the conveyance for a trip,

(6) The location of the recipient of services on the records shall be the site of delivery of banking and other financial services to any individual.

There are various other rules, which can be referred to according to the requirements of the persons providing the supply.

Also Read: Important Benefits of Registering for Composition Scheme under GST

Conclusion

We hope this article has clarified your doubts regarding the time of supply, place of supply, and value of supply under GST. These three are very important in levying GST on any item/service. For detailed rules regarding each of them, you can read the GST Act or download the Khatabook App.

FAQs

Q: What is the transaction value under GST?

Ans:

The transaction value of goods and services is the amount actually paid or due for the supply of goods or services to the provider, where the supplier and recipient are unrelated, and the price is the sole consideration of supply.

Q: What is the place of supply of services in the case of a Registered Person?

Ans:

The place of supply of services in the case of a Registered Person is such a person's location.

Q: What is the time of supply of Services under GST?

Ans:

The time of supply of Services under GST is the earliest of the following -

  • Date of invoice issuance (if invoice issuance is within the time limit) or
  • Date of service provision (if the invoice is not issued within the time limit) or
  • The date on which the advance or payment was received

Q: What is supply in GST?

Ans:

The taxable event in GST is known as supply. Supply includes both supply of goods as well as services.

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