Time of Supply for Goods on Forward Charge

By Registrationwala

10th May 2017

 

Forward Charge is a system in which the provider needs to levy the tax and dispatch the same to the credit of the Central or State Government. Under the present tax regime, the tax is imposed and gathered on most transactions using the Forward Charge mechanism (also called Direct Charge).

For instance, Navdeep Card Limited sold extra parts worth Rs 1,00,000/ - to Lokesh Automobiles and gathered VAT of Rs 14,500 at the rate of 14.5 %. The VAT gathered by Navdeep Card Limited is under the Forward Charge Mechanism.

The liability of GST (CGST and SGST or IGST, as applicable) will emerge as demonstrated as follows

Date of Invoice

The date on which the supplier issues the invoice/receipt

Due Date to Issue Invoice

The last date on which the provider is required to issue the invoice as for the supply of goods. If there should arise an occurrence of supply of goods the movement goods, the invoice should be issued at the time of removal. In different cases, at the time of delivery of goods to the recipient.

Receipt of Payment

The date on which payment is received. The purpose of taxation for this situation will be the earliest of the date on which installment is accounted in the books of records of the beneficiary or the date on which payment is credited to his bank account

CASE 1

Date of Invoice

Date of receipt of Payment

Time of supply of Goods

20th June 2017-05-09

10th July 2017-05-09

20th June 2017-05-09

In the above situation, the time of supply will be twentieth June, 2017. The reason being, the time of supply will be the earliest of date of invoice or payment receipt. For this situation, the date of receipt is sooner than the date of receipt of payment.

CASE 2

Date of Invoice

Date of receipt of Payment

Time of supply of Goods

20th June 2017-05-09

10th May 2017-05-09

10th May 2017-05-09

In the above situation, the time of supply will be tenth May, 2017. The reason being, the time of supply will be the earliest of date of invoice or payment receipt. For this situation, the date of receipt of payment is sooner than the date of invoice.

Read More: Time of Supply for Services on Forward Charge

CASE 3

Date of Invoice

Receipt of Payments entered in Account Books

Receipt of Payment credited to Bank Account

Time of Supply of Goods

10th August 2017-05-09

29th June 2017-05-09

3rd August 2017-05-09

29th June 2017-05-09

In the above situation, the time of supply will be 29th June, 2017. The reason being, the time of supply will be the earliest of date of invoice or payment receipt. For this situation, the date of receipt of payment will be earliest of.

  • Date on which the payment is entered in the books of accounts or
  • Date on which the payment is credited to the bank account.

Date on which the receipt of payment is entered in the books of account is earlier than the date on which payment is credited to the bank account. Hence, the time of supply will be 29th June, 2017.

CASE 4

Date of Invoice

Receipt of Payments entered in Account Books

Receipt of Payment credited to Bank Account

Time of Supply of Goods

10th August 2017-05-09

5th August 2017-05-09

30th June 2017-05-09

30th June 2017-05-09

In the above situation, the time of supply will be 30th June, 2017. The reason being, the time of supply will be the earliest of date of invoice or payment receipt. For this situation, the date on which payment is credited into the bank account is earlier than the date on which payment is entered in the account books.

CASE 5

Goods Removed for Supply

Payment Receipt

Time of supply of Goods

25th June 2017-05-09

5th May 2017-05-09

25th June 2017-05-09

In the above situation, invoice date is not available so the time of supply will be the earliest of the last day to issue invoice and payment receipt. Last Date to issue the invoice in case of supply involving movement of goods, will be at the time of removal of goods. Hence, the time of supply will be 25th June, 2017. This is because the date of removal of goods is earlier than date of receipt of payment

 

Time of Supply for Goods on Forward Charge

2017-05-10