CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Time of Supply
Mehta Ltd receives goods on reverse charge on 5 June. The supplier's invoice dated 20 May was received late. Mehta made an advance payment on 25 May, which was debited in its bank account on 26 May but entered in its books on 28 May. What is the time of supply?
The time of supply is 26 May. For reverse charge on goods, the payment date is the earlier of the books entry (28 May) and the bank debit (26 May), and this is earlier than receipt (5 June) and the thirty-day date (20 June).
- A20 May
- B25 May
- C26 MayCorrect
- D5 June
Explanation
The payment date is the earlier of the books entry (28 May) and the bank debit (26 May), so 26 May. The other dates are receipt 5 June and the day after thirty days from 20 May, i.e. 20 June. The earliest is 26 May. Taking 25 May is wrong because that is not the date of entry or debit.
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