GST – Time, Place and Value of Supply

After the introduction of GST one of the major changes after the replacement of indirect taxes with Goods and Service Tax is the introduction of the concept of supply. Or in other words, we can say that new concept relating to point of taxation is introduced under GST. Under old laws, taxes were charged on different points and events, for example in the case of goods taxes were charged at the time of manufacture, transport, sale etc. and in the case of services, taxes were charged at the time of provision of such services.

Now, with the introduction of GST. The concept of one nation one tax has been introduced. And the concept of Point of taxation is introduced. Under GST, the concept of SUPPLY is introduced, and GST is imposed at the time of supply of goods as well as services.

In order to gain clarity on the topic, there are three different factors to be understood:

  1. Time of Supply
  2. Place of Supply
  3. Value of Supply

Time Of Supply

The concept of time of Supply is covered under Chapter IV of Central Goods and Service Tax in Section 12. This Section clearly states that liability for payment of taxes depend upon the time of supply of goods and services i.e. at the time when goods are deemed to be supplied or services are deemed to be rendered.

Provisions relating to the supply of goods and services are different as different principles apply to them. Determination of time of supply helps in further determination of the value of supply, tax rates and the due date by when the taxpayers are required to remit their tax liability to the government.

Place of Supply

Another important concept to know about is the Place of Supply. It is an important concept, as only after the determination of such place of supply can it be determined whether CGST and SGST will be charged or IGST will be charged based on the fact is supply was interstate or intrastate. Clarification about the same is given in Chapter V of Integrated Goods and Service Tax Act 2017. Under this chapter following sections specify the conditions relating to a different category of goods and services:

  • Section 10 contains information relating to a place of supply of goods which are imported to or exported from India.
  • Section 11 contains information relating to the place of supply of all the other goods.
  • Section 12 contains information relating to the place of supply of services where the location of supplier and recipient is inside India.
  • Section 13 contains information relating to the place of supply of services where a location of either supplier or recipient is outside India.

Value of Supply

The last concept to be clear about is the value of supply. We have already discussed the other two concepts of time and place of supply, the only point to be understood is value related.

This concept is covered under Section 15 of central goods and Service Tax Act, 2017. Valuation plays an important part, as Goods and Service Tax is imposed on such value of goods or services. Usually, transactional value of these goods or services is the considered as the value of supply for the purpose of levy of GST.

Few of the methods available for valuation of goods or services are as follows:

  • Valuation of supply by comparison
  • Computed Value Method
  • Residual Method.