Time and Value of Supply: formula sheet

Key formulas

Forward charge (Section 12(2))

Time of supply = earlier of (a) date of invoice, or last date to issue invoice under Section 31, and (b) date of receipt of payment

Applies when the supplier pays the tax. Use the last date for invoicing only if the invoice is issued late or not issued.

Date of receipt of payment (Explanation 2)

Date of payment = earlier of date entered in supplier's books and date credited to supplier's bank account

Use the earlier date, not the date the cheque was received or the date of deposit.

Reverse charge (Section 12(3))

Time of supply = earliest of (a) date of receipt of goods, (b) date of payment (earlier of books entry and bank debit), (c) the date immediately following 30 days from the supplier's invoice date

Applies when tax is payable by the recipient. If none of the three can be determined, use the date of entry in the recipient's books.

Extent of supply (Explanation 1)

Supply is deemed made to the extent covered by the invoice or the payment

Part payment or part invoicing fixes the time of supply only for that part.

Excess amount up to ₹1,000 (proviso)

Excess received over the tax invoice amount, up to ₹1,000: time of supply = date of invoice for the excess, at the supplier's option

The option is the supplier's. It applies only where the excess is up to one thousand rupees.

Vouchers (Section 12(4))

Time of supply = date of issue of voucher if supply is identifiable then; otherwise date of redemption

Test is whether the goods are identifiable when the voucher is issued.

Residuary rule (Section 12(5))

If time cannot be fixed under (2), (3) or (4): date on which the periodical return is to be filed; in any other case, date on which tax is paid

Use only as a last resort.

Interest, late fee or penalty (Section 12(6))

Time of supply = date on which the supplier receives such addition in value

Applies to the addition for delayed payment of consideration.

Forward charge, invoice issued within the prescribed period (S.13(2)(a))

Time of supply = earlier of (date of invoice, date of receipt of payment)

Applies only if the invoice is issued within the period under Section 31.

Forward charge, invoice not issued within the prescribed period (S.13(2)(b))

Time of supply = earlier of (date of provision of service, date of receipt of payment)

Late invoice or no invoice. The service date replaces the invoice date.

Residual rule for forward charge (S.13(2)(c))

Time of supply = date the recipient shows the service in his books

Used only where clause (a) or (b) does not apply.

Date of receipt of payment (Explanation (ii))

Earlier of (date entered in supplier's books, date credited to supplier's bank account)

Use the earlier of the two dates, not the cheque date.

Part invoice or part payment (Explanation (i))

Supply is deemed made to the extent covered by the invoice or payment

Work out time of supply separately for each part.

Small excess receipt (proviso to S.13(2))

Excess received up to ₹1,000 over the invoice value: at the supplier's option, time of supply for the excess = date of invoice for that excess

It is an option for the supplier.

Reverse charge (S.13(3))

Time of supply = earlier of (a) recipient's payment date (books or bank debit, whichever is earlier), (b) the date immediately following 60 days from the supplier's invoice date, where the supplier must issue the invoice, (c) date of recipient's invoice, where the recipient must issue it

Clause (c) applies from 1-11-2024. If none can be determined, use the date of entry in the recipient's books.

Recipient's invoice time limit (Rule 47A)

Recipient liable under Section 9(3) or 9(4) issues invoice within 30 days from the date of receipt of the supply

For supplies received from unregistered suppliers where the recipient must issue the invoice.

Associated enterprise, supplier outside India (second proviso to S.13(3))

Time of supply = earlier of (date of entry in recipient's books, date of payment)

Applies where supplier and recipient are associated enterprises and the supplier is located outside India.

Vouchers (S.13(4))

Date of issue of voucher if the supply is identifiable then; otherwise date of redemption

Applies to supply of vouchers.

Residuary rule (S.13(5))

If time cannot be fixed: date the periodical return is due, or else date of tax payment

Last resort.

Interest, late fee, penalty (S.13(6))

Time of supply = date the supplier receives that addition in value

Applies to the added amount only.

Vouchers (section 13(4))

Time of supply = date of issue of voucher, if supply is identifiable; otherwise date of redemption

Test is whether the supply is identifiable when the voucher is issued.

Interest, late fee, penalty (section 13(6))

Time of supply = date supplier receives the addition in value

Applies only to the addition for delayed payment, not to the main supply.

Reverse charge, services (section 13(3))

Earlier of: (a) payment date in recipient's books or bank debit, whichever is earlier; (b) the date immediately following 60 days from invoice date; (c) date of invoice issued by recipient, where recipient must issue it

Clause (b) applies where the supplier must issue the invoice. If none can be determined, use the date of entry in recipient's books.

Associated enterprise, supplier outside India

Earlier of date of entry in recipient's books or date of payment

Second proviso to section 13(3).

Change in rate, supplied before change (section 14(a))

Invoice and payment both after change: earlier of payment or invoice date. Invoice before, payment after: invoice date. Payment before, invoice after: payment date.

Services were provided before the rate changed.

Change in rate, supplied after change (section 14(b))

Invoice before, payment after: payment date. Both before: earlier of the two. Invoice after, payment before: invoice date.

Services were provided after the rate changed.

Four working days proviso (section 14)

If bank credit is after 4 working days from the rate change date, the bank credit date is the date of receipt of payment

Otherwise payment date is the earlier of books entry or bank credit.

Excess amount up to ₹1,000 (section 13(2) proviso)

At supplier's option, time of supply of the excess = date of invoice for that excess

Applies where the amount received exceeds the invoice amount by up to ₹1,000.

Transaction value (section 15(1))

Value of supply = price actually paid or payable

Applies only if supplier and recipient are not related and price is the sole consideration.

Taxable value with additions

Taxable value = price + section 15(2) items not already in price − allowed discounts (section 15(3))

Section 15(2) items: other-law taxes and charges if charged separately, supplier's liabilities borne by recipient, incidental expenses (commission, packing), interest/late fee/penalty for delayed payment, and subsidies directly linked to price (other than Central or State Government subsidies).

Discount excluded (section 15(3))

Discount excluded if (a) given before or at supply and recorded in the invoice, or (b) given after supply under an agreement made at or before supply, linked to specific invoices, and the recipient's ITC attributable to it is reversed

For a post-supply discount, all three conditions in (b) must be met.

Tax amount in a tax-inclusive price (Rule 35)

Tax = (Value inclusive of tax × tax rate %) ÷ (100 + sum of tax rates %)

For CGST + SGST at 9% each, the denominator is 118. Taxable value = inclusive value − tax.

Related-person supplies (Rule 28(1))

Open market value; if not available, value of like kind and quality; else Rule 30 or 31 in that order

If the recipient is eligible for full ITC, the invoice value is deemed to be the open market value.

Transaction value (section 15(1))

Value = price actually paid or payable

Applies where supplier and recipient are not related and price is the sole consideration.

Value build-up

Value = Base price + Section 15(2) inclusions − Section 15(3) discounts allowed − Rule 33 pure agent costs

Add only items the law lists. Subtract only discounts that meet the conditions.

Inclusions under section 15(2)

(a) other-law taxes if charged separately; (b) supplier's liability paid by recipient; (c) incidental expenses incl. commission and packing; (d) interest, late fee, penalty for delay; (e) price-linked subsidies other than Central/State Government subsidies

The subsidy is included in the value of the supplier who receives it.

Discount before or at supply

Excluded if duly recorded in the invoice

Section 15(3)(a).

Discount after supply

Excluded if agreement at or before supply AND linked to invoices AND recipient reversed ITC

Section 15(3)(b). All three must be met.

Pure agent exclusion (Rule 33)

Excluded if authorised payment AND separately shown in invoice AND in addition to own supply

Pure agent receives only the actual amount incurred and holds no title to the goods or services.

Rule 27: consideration not wholly in money

Order: (a) OMV of the supply → (b) money consideration + money equivalent of non-money consideration, if known at time of supply → (c) value of like kind and quality → (d) Rule 30, then Rule 31

Move down only when the step above is not available. Note that step (b) needs the money equivalent to be known at the time of supply.

Rule 28: supply between distinct or related persons (not through an agent)

Order: (a) OMV → (b) like kind and quality → (c) Rule 30, then Rule 31

Option for goods meant for further supply as such by the recipient: supplier may take 90% of the price the recipient charges an unrelated customer for goods of like kind and quality. If the recipient is eligible for full input tax credit, the value declared in the invoice is deemed to be the OMV.

Rule 29: goods supplied through an agent

(a) OMV of the goods, or at the supplier's option 90% of the price the agent charges his unrelated customer for goods of like kind and quality → (b) if not determinable, Rule 30, then Rule 31

Applies where goods are supplied by the principal to the agent and the agent undertakes to supply them on the principal's behalf.

Rule 30: cost method

Value = 110% of cost of production or manufacture, or cost of acquisition of the goods, or cost of provision of the services

That is, cost plus 10%. Used only when the earlier steps fail.

Rule 31: residual method

Value = any reasonable means consistent with Section 15 and the valuation rules

For supply of services, the supplier may choose Rule 31 directly, disregarding Rule 30.

Rule 33: pure agent expenses

Value of supply = supplier's own charges only; pure agent reimbursements are excluded if all conditions are met

Conditions: supplier acts as pure agent of the recipient; payment is made to a third party with the recipient's authorisation; recipient receives and uses the third-party service; recipient is liable to pay; payment is separately shown in the invoice; supplier recovers only the actual amount paid; the services procured are in addition to the supplier's own services.

Rule 35: price inclusive of GST

Tax amount = (Value inclusive of tax × sum of tax rates in %) ÷ (100 + sum of tax rates in %); Taxable value = Inclusive value − tax amount

For intra-state supply the sum of tax rates is CGST rate + SGST/UTGST rate. For inter-state supply it is the IGST rate.

Quick revision

• Transaction value is the price actually paid or payable, when the parties are not related and price is the sole consideration.
• Section 15(2) adds: other-law taxes charged separately, supplier's liabilities borne by the recipient, incidental expenses such as commission and packing, interest or late fee on delayed payment, and non-government subsidies directly linked to price.
• Subsidies from the Central or State Government are not added to value.
• Taxes under the CGST, SGST, UTGST and GST (Compensation to States) Acts are not added under the 'other law' inclusion in section 15(2)(a).
• A discount is excluded if given before or at supply and recorded in the invoice, or given later under a prior, invoice-linked agreement with the recipient reversing the related input tax credit.
• Related persons include officers or directors of one another's businesses, legally recognised partners, employer and employee, and members of the same family. They also include persons where one directly or indirectly controls the other, both are controlled by a third person, or together they control a third person. A person who directly or indirectly owns, controls or holds 25% or more of the voting stock or shares of both of them also makes them related. Sole agents, sole distributors and sole concessionaires are deemed related to the other party.
• Tax in an inclusive price = value inclusive of tax × rate ÷ (100 + sum of tax rates).
• Non-money consideration: open market value first, then money plus its money equivalent, then like kind and quality, then the cost rule or residual rule in that order.
• Cost rule: value = 110% of the cost of production, manufacture, acquisition or provision. Residual rule: use reasonable means consistent with section 15, and for services the supplier may opt for it, ignoring the cost rule.
• Services: time of supply is the earlier of invoice date (if issued within the prescribed period) and payment date. If the invoice is not issued within that period, it is the earlier of provision date and payment date. If neither of these rules applies, it is the date the recipient shows receipt of the services in the books of account.
• Services under reverse charge: the earlier of the payment date (the earlier of the recipient's book entry or bank debit) and the day after 60 days from the supplier's invoice date, or the date the recipient issues the invoice where the recipient has to issue it. If the time cannot be fixed under these clauses, it is the date of entry in the recipient's books. For supplies by associated enterprises where the supplier is located outside India, it is the earlier of the recipient's book entry and the date of payment.
• Excess received up to ₹1,000 over the invoice amount can, at the supplier's option, have the invoice date for the excess as its time of supply. Interest or late fee is taxed when the supplier receives it.

Common mistakes

• Using the delivery date as the time of supply under forward charge. Fix: Under Section 12(2), delivery is not a trigger. Only the invoice date (or its due date) and the payment date count.
• Taking the invoice date when the invoice was issued late, instead of the last date for issue. Fix: The Act says date of issue of invoice or the last date required to issue it. So a late invoice does not postpone the time of supply.
• Taking the invoice date even when the invoice was issued late. Fix: First test whether the invoice came within the Section 31 period. If not, use the service date instead.
• Using the cheque date or the date of deposit as the payment date. Fix: Use the earlier of the date entered in the supplier's books and the date credited to the bank account.
• Treating a voucher as always taxable on redemption. Fix: Check if the supply is identifiable at issue. If yes, the issue date is the time of supply.
• Taxing interest on the due date or accrual date. Fix: Under section 13(6), tax arises only when the supplier receives the interest, late fee or penalty.
• Deducting every discount from the price. Fix: Allow a discount only if it meets section 15(3). A post-supply discount needs a prior agreement, a link to invoices, and ITC reversal by the recipient.
• Treating transaction value as always applicable. Fix: Always test for related persons and for sole consideration first. If either fails, use the valuation rules.
• Adding GST charged separately to the value of supply. Fix: Section 15(2)(a) covers taxes under laws other than the GST Acts and the Compensation Act. GST is not added.
• Deducting a post-supply discount without checking the conditions. Fix: For after-supply discounts, confirm agreement at or before supply, link to invoices and the recipient's ITC reversal.

Exam tips

• Write FC or RCM first. Examiners give marks for choosing the correct sub-section.
• Always show the date list. Even if your final date is wrong, you can earn step marks for the right method.
• In MCQs, watch for traps: delivery date under forward charge, cheque receipt date, and 30 days versus 60 days.
• For part payments or part invoices, show the split clearly. The extent rule is a favourite for 14-mark problems.
• Quote the section number and the exact trigger in your conclusion, for example 'Section 12(2)(b): date of payment'.
• Read the invoice date and the service date together. A late invoice changes the whole rule.
• Write the clause number, such as Section 13(2)(b), next to your answer. Examiners award marks for the rule.
• In reverse charge questions, count the 60 days carefully and show the day count.