- 6 April 2017
- Posted by: ahalwasiya
- Category: Goods and Service Tax
Under Current Regime
Under VAT, on purchases made from unregistered dealers, the recipient (registered dealer) of goods has to pay a tax called Purchase Tax. For example, Ram Traders, a registered dealer located in Karnataka purchase goods from Mr. Shiv Kumar, an unregistered trader. On this purchase, Ram Traders will be liable to pay the Purchase Tax.
Under GST, the same concept of reverse charge mechanism is retained. This is applicable on specific supply of goods and services, which is yet to be notified by the Government. Let us understand time of supply for goods under Reverse Charge Mechanism. The liability of GST (CGST and SGST or IGST as applicable) will arise as shown below:
|Earliest of the following|
|Date of Receipt of Goods||The date on which the goods are received by the recipient.|
|Date of Payment||The date on which payment is made. The earliest of the date on which the payment is accounted for in the books of accounts of the recipient or the date on which the payment is credited to his bank account.|
|30 Days from Date of Invoice||The date immediately following 30 days from the date of issue of invoice by the supplier|
If, for any reason the above dates cannot be determined, then the time of supply will be the date of recording the supply in the books of the recipient. Let us understand with examples.
|Date of Receipt of Goods||Date of Invoice||Date of Payment||Time of Supply of Goods||Explanation|
|29th July, 2017||5th August, 2017||10th November, 2017||29th July, 2017||The date of receipt of goods, in this case, is earlier than the date of payment and 30 days from the date of invoice. Hence, the time of supply will be 29th July, 2017.|
|15th August, 2017||25th August, 2017||30th July, 2017||30th July, 2017||The date of payment is earlier than the date of receipt of goods and 30 days from date of invoice. Hence, the time of supply will be 30th July, 2017.|
|10th August, 2017||1st July, 2017||15th August, 2017||31st July, 2017||In this case, 30 days from date of invoice is earlier than the date of receipt of goods and the date of payment. Hence, the time of supply will be 31st July, 2017.|