Understanding Time, Place, And Value Of Supply

Understanding Time, Place, and Value of Supply is essential for businesses registered under the Goods and Services Tax (GST) regime in India. These concepts determine the time when a transaction is considered to have taken place, the place where it is deemed to have occurred, and the value on which tax is levied. Comprehending these aspects is important to ensure businesses comply with GST regulations and accurately calculate their tax liability. In this context, it is important to understand the significance and implications of each of these aspects of supply under GST.

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What is the Time of Supply?

“Time of Supply” describes when products and services are regarded as supplied or sold. All taxpayers must know the applicable rate of SGST, CGST, and IGST while preparing a GST-compliant invoice. The time of supply aids a seller in determining the GST responsibility payment deadline. The seller must pay CGST/SGST/IGST at the time of supply. The rules for determining when to supply products and services are listed below:

  • Date of issue of invoice
  • Date of receipt of payment/advance
  • The last date by which an invoice has been issued

The earliest of the following is the time of supply for service receipt in the case of reverse charge supply.

  • Date of Payment
  • 30 days following the date from when the invoice was issued (60 days for services).

Place of Supply Under GST

For a taxpayer to decide the appropriate tax to be charged in the invoice, it is crucial to understand the location of the supply of the goods and services. This establishes the interstate or intrastate nature of a supplier.

Nature Of Supply/Transaction Place Of Supply
The location where these things are shipped Therefore, it follows that the location of supply is also the location of the change in ownership of those items.
When there is no movement of goods, either by the seller or the recipient The location of the goods at the moment of delivery to the recipient
When the goods are installed or put together at the location The place where installation is done
When the goods are delivered by means of a vessel, aircraft, train, or other conveyance The location where these items have been boarded
When goods are imported into India The place where the importer is located
When goods are exported from India The place where goods are exported (Exports are exempted under GST)

The location where services are provided is also where those services are received. The site of supply, however, is the service provider’s location if the recipient is an unregistered dealer and the location is also unavailable. Regarding immovable property, the location of the asset serves as the source for any associated services.

Value of Supply Under GST

The term “Value of Supply” refers to the sum the seller receives in return for any goods or services. The GST amount will ultimately be inaccurate if the value is not determined precisely. The cost or consideration the customer gives the supplier constitutes the supply’s value in a transaction. It includes additional charges like shipping and handling but excludes GST. Even when they are not sales, some actions—like the transfer of shares between two states—are nonetheless regarded as taxable Transactions. In these circumstances, the open market value or the anticipated selling price of the products is the value of supply.

Supply of Services Under GST

The place of supply for goods and services under the GST comprises all supply modes. Some categories are sale, transfer, barter, trade, and licensing. It also covers any rentals, leases, or disposals agreed to by a person in the conduct or advancement of business.

At the moment of supply, there would be an obligation to pay either the federal or state sales tax on services. As per the GST regulation, the time of supply of services shall be the following:

  • If the invoice is issued within the allowed time frame, the date of issuance or the date of payment receipt, whichever occurs first.
  • The conclusion of the service’s delivery or the day that money is received. If the supplier hasn’t received the invoice by the deadline, the date will be related to the earlier processed date.
  • The date on which the receipt shows the receipt of services in his books of account in the case where the provision of the above clause does not apply.

Supply of Free Items Under GST

Under the provisions of GST law, you may not be allowed to receive an input tax credit (refund of tax paid on the purchase of goods) on goods that were either lost, destroyed, written off, or disposed of by you as gifts and free samples. The place of supply for goods and services under the GST comprises all supply modes. Some categories are sale, transfer, barter, trade, and licensing. It also covers any rentals, leases, or disposals agreed to by a person in the conduct or advancement of business. Rules and provisions related to the value of supplies under the GST regime can be found in section 15 of the CGST Act, 2017.

Conclusion

Time, place and value of supply are three key considerations that help in determining the due date to pay the required GST, the type of GST that should be levied and amount of GST to be charged on a transaction. Understanding these 3 concepts helps taxpayers avoid situations where they are not sure which type of tax may apply, or when the payment is due.

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Nitin Bansal
Nitin Bansal
Chartered Accountant
MRN No.: 430412
City: Jaipur

I am a Fellow Chartered Accountant (FCA) and LLB graduate with 10 years of experience in corporate auditing, taxation, and financial consulting. My expertise includes corporate audits, income tax planning, HSN code classification, and GST rate advisory. Through my blogs and articles, I aim to simplify corporate taxation, auditing, and GST compliance, making financial matters more accessible for professionals and business owners.