CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Time of Supply
Sharma Traders (registered) supplies taxable goods to Iyer Metals. The invoice is issued on 10 August for Rs 50,000. On 5 August, Iyer Metals paid an advance of Rs 20,000, which was credited to Sharma's bank account on 6 August and entered in its books on 7 August. What is the time of supply for the Rs 20,000 portion of the goods?
The time of supply for the Rs 20,000 portion is 6 August. Payment is deemed received on the earlier of the books entry and the bank credit, which is 6 August, and this is earlier than the invoice date of 10 August.
- A5 August
- B6 AugustCorrect
- C7 August
- D10 August
Explanation
For goods, time of supply is the earlier of the invoice date (or last date for issuing it) and the date of receipt of payment. Payment date is the earlier of the books-entry date (7 Aug) and the bank-credit date (6 Aug), so 6 Aug. This is earlier than 10 Aug, and applies to the extent covered by the payment. 5 Aug is the date the payer paid, which is wrong.
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