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

Sharma Fabricators supplies taxable goods to a buyer. The tax invoice dated 10 August 2026 is for Rs. 2,00,000. The buyer pays Rs. 2,00,800 on 20 August 2026, i.e. Rs. 800 more than the invoice amount. Sharma Fabricators opts to use the proviso to section 12(2). What is the time of supply for the excess Rs. 800?

Because the excess of Rs. 800 is within the Rs. 1,000 limit and the supplier has opted for the proviso, the time of supply for that excess is the date the supplier issues an invoice for the excess amount, not the date of payment.

  1. A10 August 2026, the invoice date
  2. B20 August 2026, the date of receipt of payment
  3. CThe date on which the supplier issues an invoice for the excess amountCorrect
  4. DThe date on which the supply is next reported in the periodical return

Explanation

The proviso covers an excess of up to Rs. 1,000 over the invoiced amount received by the supplier. At the supplier's option, the time of supply for that excess is the date of issue of the invoice for it. Rs. 800 is within the limit, so the option is available, and the payment date is the distractor when the option is not exercised.

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