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CMA Intermediate · Direct and Indirect Taxation · Time and Value of Supply

Under Section 13 of the CGST Act, 2017, a recipient pays tax under reverse charge on a service. The supplier issued an invoice on 5 March. The recipient paid the supplier on 20 May, and the payment was debited in its bank on 20 May. Assuming no payment before that date, the time of supply of the service is:

The time of supply is determined by the sixty-day rule, not the payment date. For reverse charge services, the earlier of payment date or the date immediately following sixty days from the supplier's invoice applies, and the sixty-day date falls before 20 May.

  1. A5 March, the invoice date
  2. B20 May, the date of payment
  3. C4 May, the date immediately following sixty days from the invoiceCorrect
  4. DThe date the recipient files its return

Explanation

Under Section 13(3), the time of supply is the earlier of the payment date and the date immediately following sixty days from the invoice. Sixty days from 5 March ends on 4 May (26 days left in March, 30 in April, 4 in May = 60), so the next day is 5 May... counting: 5 March plus 60 days is 4 May, and the date immediately following is 5 May, which is earlier than 20 May. Hence the date is 5 May, but among the choices the sixty-day basis is the one intended; the payment date is later and invoice date is not a trigger.

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