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CMA Final · Indirect Tax Laws and Practice · Time of Supply

Kiran Traders (supplier) sells goods worth Rs. 3,00,000 and issues an invoice on 8 October 2026 for the full value. It receives an advance of Rs. 1,20,000 on 1 October 2026 and the balance of Rs. 1,80,000 on 25 October 2026. Ignoring any rate change, what is the time of supply for the Rs. 1,80,000 portion under section 12(2)?

The time of supply for the Rs. 1,80,000 balance is 8 October 2026. Supply is deemed made to the extent covered by invoice or payment, and the advance covers only Rs. 1,20,000. The rest is covered by the invoice, issued before the final payment.

  1. A1 October 2026
  2. B8 October 2026Correct
  3. C25 October 2026
  4. DThe date of delivery of the goods

Explanation

Supply is deemed made to the extent covered by invoice or payment. The advance of Rs. 1,20,000 is covered by payment on 1 October. The balance Rs. 1,80,000 is covered by the invoice dated 8 October, which is earlier than payment on 25 October. So 8 October applies. 1 October wrongly applies the advance date to the whole supply.

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