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CA Final · Indirect Tax Laws · Time of Supply

The rate of GST on a service changes from a lower rate to a higher rate with effect from 1 October. Nandini Consultants completed and provided a taxable service on 10 October. The client paid the full consideration on 25 September, credited to the bank and entered in the books on the same day. Nandini issued its invoice on 15 October. As per the provisions on change in rate of tax, what is the time of supply and which rate applies?

The time of supply is 15 October and the new, higher rate applies. The service was supplied after the rate change, and where the invoice is issued after the change but payment came before it, the time of supply is the invoice date, not the payment date.

  1. A25 September, the date of payment; the old rate applies
  2. B10 October, the date of provision of service; the new rate applies
  3. C1 October, the date of the change in rate; the new rate applies
  4. D15 October, the date of invoice; the new rate appliesCorrect

Explanation

The service was supplied after the change in rate. The payment was received before the change but the invoice was issued after it. In that situation the time of supply is the date of issue of invoice, 15 October, so the new rate applies. The old-rate option wrongly applies the rule for services supplied before the change, where payment received earlier would fix the date.

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