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CMA Intermediate · Direct and Indirect Taxation · Time and Value of Supply

Ghosh Pharma issues a tax invoice for ₹40,000 on 10 July 2026 and, on 15 July 2026, receives ₹40,800 from the customer. Under the proviso to Section 12(2), how may the supplier treat the excess ₹800?

Because the excess of ₹800 is within the ₹1,000 limit, the supplier may, at its option, treat the date of issue of the invoice for that excess amount as the time of supply for it, under the proviso to Section 12(2).

  1. ATime of supply for the excess is 15 July only, with no option
  2. BTime of supply for the excess is, at the supplier's option, the date of issue of invoice for that excess amountCorrect
  3. CThe excess is exempt from tax as it is below ₹1,000
  4. DThe excess must be refunded before any time of supply arises

Explanation

The proviso lets a supplier who receives up to ₹1,000 in excess of the invoice amount choose the date of issue of invoice for that excess as the time of supply. The excess is ₹800, which is within the limit, so the option is available. It is not exempt, and no refund is required.

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