Rama & Associates provide
consultancy service on monthly basis for Rs 50000. As per agreement fees for
consultancy accrues on the last day of the relevant month. Hence, the service
gets completed on the last day of the relevant month.
For the month of July services bill is raised by 5th August but
cheque is received on 30th July and deposited in bank on the same
day. However, credited in the Bank account on 7th august. In between
GST rate changed from 15% to 18% on 1st August. Determine Time of
supply and relevant rate of taxation.
of section 14 also specifies that the time of supply would be decided according
to the date on which supplier receives the payment or the date on which payment
is entered in books of account or payment credited in his bank account,
whichever is earlier. However proviso to this section further provides that date
of receipt of payment would be the date of credit in the bank account if such
credit in bank account is after 4 working days from change in rate of tax.
view of the above provision, in present example, date of credit is 6th
working day after the change in rate of taxation. Thus, the date of credit
(7/08/2017) shall be considered as the date of payment.
per section 14, if in case supply of services is made before the change of rate
of tax i.e. 31st July and
raising of invoice and receipt of payment are both after change in tax rate,
then time of
supply shall be date of receipt of payment or
of issuing invoice, whichever is earlier
In view of the
above provision, date of payment is 7.08.2017 and date of invoice is 05/08/2017.
Thus, earlier date 05/08/2017 shall be the time of supply and tax rate of 18%
will be applicable in supply of services.