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CA Final · Indirect Tax Laws · Time of Supply

Vasudha Traders, a registered supplier in Pune, supplies taxable goods to Kaveri Retail. Invoice No. 112 for Rs 2,00,000 is issued on 10 June. Kaveri Retail pays Rs 2,00,800 on 5 June, which is Rs 800 more than the invoice amount. Vasudha's books show the receipt on 5 June and the bank credit on 6 June. Vasudha has opted to use the invoice date for the excess amount. What is the time of supply for the excess Rs 800?

The time of supply for the excess Rs 800 is 10 June. Where a supplier of goods receives up to Rs 1,000 more than the invoice amount, he may opt for the invoice date as the time of supply for that excess. Rs 800 is within the limit and the option was exercised.

  1. A5 June, because the payment was entered in the books on that date
  2. B6 June, because the bank credit was on that date
  3. C10 June, being the date of invoice issued for the excess amountCorrect
  4. DThe date on which tax is paid under the residuary rule

Explanation

For goods, where the supplier receives up to Rs 1,000 in excess of the invoiced amount, the time of supply for the excess is, at the supplier's option, the date of issue of invoice for that excess. The excess is Rs 800, which is within the limit, and the option has been exercised, so the date is 10 June. Choosing 5 June ignores the proviso, and 6 June applies only if no option is exercised and the bank date is the earlier of the two dates, which it is not.

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