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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Time of Supply

Mehta Agro Ltd must issue its invoice for a supply of goods by 15 September. It issues the invoice on 18 September. It records the buyer's cheque in its books on 12 September, but the amount is credited to its bank account on 14 September. Which is the time of supply?

The time of supply is 12 September. Under Explanation 2 to Section 12(2), payment is received on the earlier of the book entry date and the bank credit date, and this is earlier than the 15 September invoice due date.

  1. A12 SeptemberCorrect
  2. B14 September
  3. C15 September
  4. D18 September

Explanation

Explanation 2 to Section 12(2) says the date of receipt of payment is the date the payment is entered in the books or credited to the bank account, whichever is earlier. That gives 12 September. The time of supply is the earlier of this and the last date for invoicing (15 September), so it is 12 September. Taking the bank credit date of 14 September wrongly uses the later date.

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