S 10-Time and value of Supply

Chapter IV of CGST Act read with CGST Rules, 2017
Compiled By –
Bharat Trivedi | Executive | Indirect Tax Vertical
Asija & Associates LLP | Chartered Accountants
gst@asija.in

Liability to Pay / Charge TAX Arises When ?
 When does the liability to pay tax arise?
 The liability to pay tax on goods or service shall arise at the time of supply.
 Now the question comes what is Time of Supply ?
 Is it the date of issue of invoice by supplier or the date on which the supplier receives
payment for the supply ?
 In case of supply on which Reverse Charge is applicable – Is it the date of receipt of goods or
service or the date on which payment is made ?
 In case of supply of goods or service is through a Voucher – Is it date of issue of voucher,
or date of redemption of voucher
GST Wing | Asija & Associates LLP gst@asija.in

Time of Supply In Case of SERVICE
 What is Time of Supply in case of Reverse Charge Transactions ?
 In case of supplies of SERVICE in respect of which tax is paid or liable to be paid on reverse
charge basis, the time of supply shall be EARLIEST of the following dates:-
 The date of payment, that is
o The date of payment is entered in the books of account of the recipient or
o the date on which the payment is debited in his bank account, whichever is earlier; or
 The date immediately following 60 days from the date of issue of invoice or any other
document, by whatever name called, issued in lieu thereof by the supplier:
 Note:-
 Where it is not possible to determine the time of supply as per the above clause, then the
time of supply shall be the date of entry in the books of account of the recipient of
supply.
 In case of supply by associated enterprises, where the supplier of service is located
outside India, the time of supply shall EARLIEST of the following dates:-
 Date of entry in the books of account of the recipient of supply or
 Date of payment

 What is Time of Supply in case of Supply of Service through VOUCHERS?
 The time of supply of Service shall be the Earliest of:
 The date of issue of voucher, if the supply is identifiable at that point; or
 The date of redemption of voucher, in all other cases.
 “Voucher” means
 An instrument where there is an obligation to accept it as consideration or part
consideration for a supply of goods or services or both and
 Where the goods or services or both to be supplied or the identities of their potential
suppliers are either indicated on the instrument itself or in related documentation,
 Including the terms and conditions of use of such instrument;

 What is Time of Supply in case of Supply of Service ? (other Than specified previously)
 Case - 1 – Where invoice is issued before the last date* on which supplier is required
to issue invoice. The time of supply of goods shall be the Earliest of:
 Date of issue of invoice by supplier or
 Date of receipt of payment by supplier
 Case - 2 – Where invoice is issued after the last date* on which supplier is required to
issue invoice. The time of supply of goods shall be the Earliest of:
 Date of provision of service or
 Date of receipt of payment by supplier
 Case - 3 – In any other case, not covered under Case 1 or Case 2 . The time of supply
of goods shall be
 the date on which the recipient shows the receipt of services in his books of
accounts

Time of Supply In Case of GOODS
 What is Time of Supply in case of Reverse Charge Transactions ?
 In case of supplies in respect of which tax is paid or liable to be paid on reverse charge
basis, the time of supply shall be the EARLIEST of the following dates, namely:—
 The date of the receipt of goods; or
 The date of payment, that is
o The date of payment is entered in the books of account of the recipient or
o the date on which the payment is debited in his bank account, whichever is
earlier; or
 The date immediately following 30 days from the date of issue of invoice or any other
document, by whatever name called, issued in lieu thereof by the supplier:
Note:-
Where it is not possible to determine the time of supply as per the above clause, then the time of
supply shall be the date of entry in the books of account of the recipient of supply.

 What is Time of Supply in case of Supply of Goods through VOUCHERS?
 The time of supply of goods shall be the Earliest of:
 The date of issue of voucher, if the supply is identifiable at that point; or
 The date of redemption of voucher, in all other cases.
 “Voucher” means
 An instrument where there is an obligation to accept it as consideration or part
consideration for a supply of goods or services or both and
 Where the goods or services or both to be supplied or the identities of their potential
suppliers are either indicated on the instrument itself or in related documentation,
 Including the terms and conditions of use of such instrument;

 What is Time of Supply in case of Supply of Goods? (other Than specified previously)
 The time of supply of goods shall be the Earliest of:
 Date of issue of invoice by supplier/ last date on which supplier is required to
issue invoice for such supply.
 Date on which the supplier receives payment for the supply
NOTE:
 Where the supplier receives an amount up to ` 1000/- in excess of amount indicated
in tax invoice, the time of supply for such excess amount shall, at the option of the said
supplier shall be
 Date of issue of invoice in respect to the said excess payment or
 Date on which supplier receives payment

TIME OF SUPPLY – SPECIAL CASES
 Where it is not possible to determine time of supply, of goods or service as
detailed previous slides. The Time of Supply shall be :-
 Case -1 – Where periodical returns have to be filled by the supplier - The Time of
Supply shall be the date on which a periodical return has been filed,
 Case -2 – In any other case - The Time of Supply shall be the date on which tax
is paid.
 Case - 3 – In case of supply relating to an addition in the value of supply by way
of interest, late fee or penalty for delayed payment, The time of supply shall be :-
 The date on which supplier receives such addition in value.

TIME OF SUPPLY – IN CASE OF
Change in Effective Rate of Tax
 How will the time of supply be determined where there has been a change in the rate of
tax in respect of goods or services or both and
 Case 1 – Where the Goods or Services have been supplied BEFORE the change of rate of
Tax and
 Where invoice issued and payment received after the change of rate of Tax, Time of
supply will be Date of receipt of payment or issue of invoice, whichever is earlier. or
 Where the invoice is issued prior to the change in rate of tax but payment is received
after the change in rate of tax, the time of supply shall be the date of issue of
invoice. or
 Where the payment is received before the change in rate of tax, but the invoice for the
same is issued after the change in rate of tax, the time of supply shall be the date of
receipt of payment;

TIME OF SUPPLY – IN CASE OF
Change in Effective Rate of Tax
 How will the time of supply be determined where there has been a change in the rate of
tax in respect of goods or services or both and
 Case 2 – Where the Goods or Services have been supplied AFTER the change of rate of
Tax and
 Where invoice issued and payment received before the change of rate of Tax, Time of
supply will be date of receipt of payment Or issue of invoice, whichever is earlier. or
 Where the invoice has been issued after the change in rate of tax but payment is
received before the change in rate of tax, the time of supply shall be the date of issue
of invoice.
 Where the payment is received after the change in rate of tax, but the invoice for the
same is issued prior to the change in rate of tax, the time of supply shall be the date
of receipt of payment;
 Note:-
Date of receipt of payment shall be the date of credit in the bank account if such credit in
the bank account is after 4 working days from the date of change in the rate of tax

VALUE OF TAXABLE SUPPLY
 On what value of supply, Tax be charged?
 The value of supply of goods or services shall be the Transaction Value.
 The Transaction value is the price actually paid or payable for the supply,
 Provided the supplier and the recipient of supply are not related and
 Price is the sole consideration for the supply.
 Value of supply shall Include:-
 Any Tax, Duty, Cess, fee, charges levied under any law in force other than GST if
charged separately by the supplier
 Any amount the supplier is liable to pay, in relation to such supply but has been
incurred by recipient and not included price actually paid or payable.
 Incidental expenses (including commission and packing) charged by supplier to the
recipient
 Interest or late fee or penalty for delayed payment of any consideration for any
supply.
 Subsidies directly linked to the price excluding subsidies provided by the Central /
State Government. (Subsidy shall be included in the value of supply, the supplier
who receive subsidy).

VALUE OF TAXABLE SUPPLY
 Value of supply shall Not Include:-
 The value of Supply shall not include any discount which is given:-
 Before or at the time of the supply, if such discount has been duly recorded in
the invoice issued in respect of such supply;
 After the supply has been effected, if—
o Such discount is established in terms of an agreement entered into at or before
the time of such supply and
o specifically linked to relevant invoices; and
o input tax credit as is attributable to the discount on the basis of document
issued by the supplier has been reversed by the recipient of the supply.

DETERMINATION OF VALUE OF SUPPLY
 Determination of Value of Supply in Specific Case:-
 Where the consideration is not wholly in money
 Where the supply is made through an agent
 Value of supply between distinct or related persons, other than through
agent
 Value of supply of goods/services or both based on cost
 Residual method for determination of value of supply
 In case of Supply through a Pure Agent
 In case of Supply of 2nd Hand Goods:
 In case of Repossession of Goods:
 In case of supply through Voucher or Coupon

Where Consideration is not wholly in money:
 Where the supply of goods or services is for a consideration not wholly in money, the
value of the supply shall,-
 Be the open market value* of such supply;
 If open market value is not available, the sum total of consideration in money and
any further amount in money, equivalent to consideration not in money, if such
amount is known at the time of supply;
 If the value of supply is not determinable, on the basis of the above 2 points, the
value of supply shall be equivalent to goods or services or both of like kind and
quality*;
 If the value is not determinable, on the basis of the above 3 points, it shall be the
sum total of consideration in money and any further amount in money, equivalent
to consideration not in money as determined by the application of Rule 30 or Rule
31 in that order.

 “Open Market Value” of a supply of goods or services or both means
 The full value in money, excluding the IGST, CGST, SGST, UTGST and Cess
 payable by a person in a transaction, where supplier and recipient are not related &
 price is the sole consideration, to obtain such supply at the same time when supply
being valued is made;
 “Supply of goods or services or both of like kind and quality” means
 Any other supply of goods/services or both made under similar circumstances
 which in respect of characteristics, quality, quantity, functional components, materials,
and reputation of goods/services or both first mentioned, is same or closely or
substantially resembles, that supply of goods/services or both.

 Illustrations:
 Question 1:- Where a new phone is supplied for `20,000/- along with the exchange of
an old phone and if the price of the new phone without exchange is `24,000/-. What
will be the value of Supply of new phone will it be 20,000/- or `24,000/- ?
Answer:- The open market value of the new phone is `24,000/-.
 Question 2:- Where a laptop is supplied for `40,000/- along with the barter of a printer
that is manufactured by the recipient and the value of the printer known at the time of
supply is `4,000/- but the open market value of the laptop is not known, What will be
the value of Supply of Laptop
Answer:- The value of the supply of the laptop shall be `44,000/-.

 The value of supply of goods between the principal and his agent shall-
 Be the open market value of the goods being supplied, or
 at the option of the supplier, be 90% of the price charged for the supply of
goods of like kind and quality by the recipient to his customer, not being a
related person, where the goods are intended for further supply by the said
recipient.
 Where the value of a supply is not determinable as above, the same shall be
determined by the application of rule 30 or rule 31 in that order.
Where supply of goods is made through an Agent

 Illustration:
 Question:- A principal supplies groundnut to his agent and the agent is
supplying groundnuts of like kind and quality in subsequent supplies at a price of
`5,000/- per quintal on the day of the supply.
Another independent supplier is supplying groundnuts of like kind and quality
to the said agent at the price of `4550/-.
What would be the Value of Supply
 Answer:- The value of the supply made by the principal shall be `4550/- or
where he exercises the option, the value shall be 90% of `5000/- i.e., `4500/- per
quintal.
Where supply of goods is made through an Agent

 Value of supply between distinct/related persons, other than through agent.-
 In case of supply of goods/services or both between
 Distinct persons* or
 Where supplier and recipient are related, other than where supply is made
through an agent,
 The value of supply of goods/services or both shall be:-
o Be open market value of such supply;
o If open market value is not available, be value of supply of goods or services of
like kind and quality;
o If value is not determinable as above, it shall be the value as determined by
applying rule 30 or rule 31, in that order
 Note: Where recipient is eligible for full ITC, value declared in invoice shall be
deemed to be open market value of goods or services.
Between distinct/related persons

 Note: Where goods are intended for further supply by recipient, value at option of
supplier, be an amount equivalent to 90% of price charged for supply of goods of like
kind and quality by recipient to his customer not being a related person
 Note: “Distinct Persons” means
 A person who has obtained or is required to obtain more than one registration,
whether in one State/Union territory or more than one State or Union territory shall,
in respect of each such registration, be treated as distinct persons. (In case of different
business vertical)
 Where a person who has obtained or is required to obtain registration in a State or
Union territory in respect of his establishment in any another State or Union territory,
then such other establishments shall be treated as establishments of distinct persons.
Between distinct/related persons

 Value of supply of goods or services or both based on cost (Rule 30):
 Where value of a supply is not determinable by any of preceding rules, the value shall
be 110% of cost of production or manufacture or cost of acquisition of such goods or
cost of provision of such services.
 Residual method for determination of value of supply of goods or services (Rule 31):
 Where value of supply cannot be determined under previous rules, the same shall be
determined using reasonable means consistent with principles and general provisions
of section 15.
 In case of supply of services, supplier may opt for this rule ignoring valuation based on
cost (Rule 30).
IN SPECIFIC CASES

 The expenditure incurred by a supplier as a pure agent* of recipient shall be excluded
from the value of supply, if all the following conditions are satisfied:
 The supplier acts as pure agent of the recipient of supply, when he makes the
payment to the 3rd party on authorization by such recipient;
 The payment made by the pure agent on behalf of recipient of supply is separately
indicated in invoice issued by the pure agent to recipient of service;
 The supplies procured by the pure agent from the 3rd party as a pure agent of
recipient are in addition to the services he supplies on his own account.
 “Pure agent” means a person who
 Enters into contract with recipient of supply to act as his pure agent, to incur
expenditure in the course of supply of goods or services;
 Neither intends nor holds any title to goods or services so procured as pure agent
 Does not use for his own interest goods or services so procured; and
 Receives only actual amount incurred to procure such goods or services in addition
to amount received for supply he provides on his own account.
In case of supply of Service by a PURE AGENT

 Illustration:
 Question:- Corporate services firm “A” is engaged to handle the legal work
pertaining to the incorporation of Company “B”. Other than its service fees, “A”
also recovers from “B”, registration fee and approval fee for the name of the
company paid to the Registrar of Companies. Is GST chargeable on the
registration fee and approval fee paid by “A” to Registrar of Companies ?
 Answer:- The fees charged by the Registrar of Companies for the registration and
approval of the name are compulsorily levied on B. A is merely acting as a pure
agent in the payment of those fees. Therefore, A’s recovery of such expenses
is a disbursement and not part of the value of supply made by A to B.
In case of supply of Service by a PURE AGENT

 Value of supply inclusive of IGST, CGST, SGST, UTGST:
 Where the value of supply is inclusive of IGST, CGST, SGST, UTGST as the case may
be, the tax amount shall be determined as follows:
 Tax amount = (Value inclusive of taxes “X” tax rate in % of IGST,CGST, SGST or
UTGST) ÷ (100+ sum of tax rates applicable, in %)
 Value of supply in case of Supply of 2nd Hand Goods:
 Where taxable supply is provided by a person dealing in buying and selling of second
hand goods and
 where no input tax credit has been availed on purchase of such goods,
 the value of supply shall be the difference between the selling price and purchase price
and
 where value of such supply is negative, it shall be ignored
IN SPECIFIC CASES

 Value of supply in case of Repossession of Goods:
 Purchase value of goods repossessed from defaulting borrower, who is not registered,
for the purpose of recovery of a loan or debts shall be Deemed to be
 The purchase price of such goods by the defaulting borrower, reduced by 5% for every
quarter or part thereof, between the date of purchase and date of disposal by the
person making such repossession.
 Value of supply in case of a Voucher or a Coupon :
 The value of a token, or a voucher, or a coupon, or a stamp (other than postage stamp)
which is redeemable against a supply of goods or services or both shall be
 Equal to money value of goods or services or both redeemable against such token,
voucher, coupon, or stamp.
IN SPECIFIC CASES

THANK YOU
FOR ANY QUERIES KINDLY CONTACT OUR GST TEAM :
CA Rahul Mishra
Partner
(rahul.mishra@asija.in)
CA Amber Agrawal
Associate Director
(amber.agrawal@asija.in)
CA Prakhar Gupta
Associate Director
(prakhar.gupta@asija.in)
ASIJA & ASSOCIATES LLP
CHARTERED ACCOUNTANTS
H.O. : 34/5 , GOKHALE MARG, LUCKNOW
PH. NO. : 0522-4004652,2205072
gst@asija.in

This presentation has been prepared to provide a gist of the applicable law
pertaining to GST as issued till date. (29/06/2017)
For detailed insight and for better understanding of the various provision of the
law, the said presentation should be read along with related provision of CGST Act,
IGST Act, SGST Act & related rules.
We shall not be responsible for any decision taken on the basis of the said
presentation, without obtaining our professional guidance or consultation on the
matter for which reliance was made on this presentation.”
DISCLAIMER

LAST DATE TO ISSUE INVOICE FOR A SUPPLY
OF SERVICES
 A Registered person supplying taxable services shall issue a tax invoice showing
the particulars within:
 A period of 30 days from the date of supply of service.
 A period of 45 days from the date of supply of service.(For Banking, Insurance
or a Financial Institution including NBFC)
 However, government on recommendation of the Council, by notification specify
the categories of services in respect of which:
 Any other document issued in relation to supply shall be deemed to be a Tax
Invoice OR
 Tax invoice may not be issued.

S 10-Time and value of Supply

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