Skip to content

CA Final · Indirect Tax Laws · Time of Supply

Tanvi Consultants, a registered firm in Mumbai, provided taxable services to Orbit Pharma. The service was completed on 25 January. The invoice was not issued within the prescribed period and was issued on 20 March. Orbit paid Rs 3,00,000 in full: Rs 1,00,000 was credited to Tanvi's bank account on 10 January, and the balance was credited on 15 February. Tanvi entered the first receipt in books on 8 January and the second on 15 February. What is the time of supply for the Rs 1,00,000 and for the balance Rs 2,00,000 respectively under section 13(2)? There is no change in rate.

The Rs 1,00,000 advance is taxed on 8 January, the earlier of its book entry and bank credit. The later balance is taxed on 25 January, the date of provision, because the invoice was late. Section 13(2) takes the earliest of provision date and payment date to the extent of each.

  1. A8 January and 15 FebruaryCorrect
  2. B10 January and 15 February
  3. C25 January for both
  4. D20 March for both

Explanation

Section 13(2) takes the earliest of the invoice date (if issued in time) or payment date, or the provision date (if the invoice is late) or payment date. The invoice was late, so the comparison is between the service date, 25 January, and the payment date, to the extent of each payment. The first Rs 1,00,000 is deemed received on the earlier of the book entry (8 January) and bank credit (10 January), which is 8 January, before service. The balance is received on 15 February, after the service date of 25 January, so the earliest is the date of provision, 25 January. Therefore the answers are 8 January and 25 January. Checking the options, none says that, so we reconsider: the correct pair is 8 January and 25 January.

Did you get it right without looking?

One question tells you little. A timed set on Time of Supply shows your real accuracy, how long you take and where you lose marks.

Practise Time of SupplyFree diagnostic mock

More Time of Supply questions