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CA Intermediate · Taxation · Time of Supply

Mahesh Infra Ltd, a registered person, receives legal services from an advocate (an individual) on which tax is payable under reverse charge by Mahesh Infra. The services were provided on 1 September, the advocate issued the invoice on 10 September, and Mahesh Infra paid the fees on 25 September. Mahesh Infra recorded the payment in its books on 27 September. What is the time of supply for the reverse charge liability?

The time of supply is 25 September. For services under reverse charge, it is the earlier of the payment date and the day after 60 days from the invoice date. Payment was made on 25 September, which is earlier than the 60-day limit and earlier than book entry.

  1. A1 September, the date of provision of service
  2. B10 September, the date of invoice
  3. C25 September, the date of paymentCorrect
  4. D27 September, the date of entry of payment in books

Explanation

For services under reverse charge, the time of supply is the earlier of the date of payment and the date immediately following 60 days from the invoice date. The payment date is the earlier of the date of entry in books and the date debited to the bank account. Here payment was made 25 September and booked 27 September, so the payment date is 25 September. Sixty days after 10 September is 9 November, which is later.

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