INTRA STATE SUPPLY
Section 8 of the IGST Act provides that intra State supply means any supply of goods and/or services where location of the supplier and place of supply are in the same State or same Union territory
Exceptions –
- Supply of goods to or by a Special Economic Zone developer or a SEZ unit; or
- Goods imported into the territory of India; or
- Supplies made to a tourist(section 15)
PRINCIPLES DEFINING INTRA STATE SUPPLY
TAX APPLICABLE
In case of Intra-state supply of goods, CGST and SGST is applicable.
CGST: Under GST, CGST is a tax levied on Intra State supplies of both goods and services by the Central Government and will be governed by the CGST Act. SGST will also be levied on the same Intra State supply but will be governed by the State Government.
This implies that both the Central and the State governments will agree on combining their levies with an appropriate proportion for revenue sharing between them. However, it is clearly mentioned in Section 8 of the GST Act that the taxes be levied on all Intra-State supplies of goods and/or services but the rate of tax shall not be exceeding 14%, each.
SGST: Under GST, SGST is a tax levied on Intra State supplies of both goods and services by the State Government and will be governed by the SGST Act. As explained above, CGST will also be levied on the same Intra State supply but will be governed by the Central Government.
Any tax liability obtained under SGST can be set off against SGST or IGST input tax credit only.
EXAMPLE:
Let’s suppose Rajesh is a dealer in Maharashtra who sold goods to Anand in Maharashtra worth Rs. 10,000. The GST rate is 18% comprising of CGST rate of 9% and SGST rate of 9%. In such case, the dealer collects Rs. 1800 of which Rs. 900 will go to the Central Government and Rs. 900 will go to the Maharashtra Government.
TIME OF SUPPLY
TIME OF SUPPLY OF GOODS
Time of supply of goods is earliest of:
1. Date of issue of invoice.
2. Last date on which invoice should have been issued.
3. Date of receipt of advance/ payment*.
For example:
Mr. X sold goods to Mr. Y worth Rs 1,00,000. The invoice was issued on 15th January. The payment was received on 31st January. The goods were supplied on 20th January.
Time of supply is earliest of –
1. Date of issue of invoice = 15th January
2. Last date on which invoice should have been issued = 20th January
Thus the time of supply is 15th January.
If an advance of Rs 50,000 is received by Mr. X on 1st January?
The time of supply for the advance of Rs 50,000 will be 1st January (since the date of receipt of advance is before the invoice is issued). For the balance Rs 50,000, the time of supply will be 15th January.
TIME OF SUPPLY FOR SERVICES
Time of supply of services is earliest of:
1. Date of issue of invoice
2. Date of receipt of advance/ payment.
3. Date of provision of services (if invoice is not issued within prescribed period)
Example:
Mr. A provides services worth Rs 20000 to Mr. B on 1st January. The invoice was issued on 20th January and the payment for the same was received on 1st February.
Firstly check if the invoice was issued within the prescribed time or not. The prescribed time is 30 days from the date of supply i.e. 31st January. The invoice was issued on 20th January. This means that the invoice was issued within a prescribed time limit.
The time of supply will be earliest of –
1. Date of issue of invoice = 20th January
2. Date of payment = 1st February
This means that the time of supply of services will be 20th January.
TIME OF SUPPLY UNDER REVERSE CHARGE
In case of reverse charge the time of supply for service receiver is earliest of:
1. Date of payment*
2. 30 days from date of issue of invoice for goods (60 days for services)
For example:
M/s ABC Pvt. Ltd undertook service of a director Mr. X worth Rs. 50,000 on 15th January. The invoice was raised on 1st February. M/s ABC Pvt Ltd made the payment on 1st May.
The time of supply, in this case, will be earliest of –
1. Date of payment = 1st May
2. 60 days from date of date of invoice = 2nd April
Thus, the time of supply of services is 2nd April.
TIME OF SUPPLY FOR VOUCHERS
Vouchers are an instrument where there is an obligation to accept:
- It as consideration
- Part consideration for a supply of goods or services
For vouchers, the time of supply is the date of issue of voucher, if the supply is identifiable at that point. Else, the time of supply for vouchers is the date of redemption of voucher.
OTHER TYPES OF SUPPLY
In case, it is not possible to determine the time of supply under any of the methods mentioned above, the time of supply would be determined as under:
- In a case where a periodical return has to be filed, the date on which such return is to be filed.
- In any other case, be the date on which the tax is paid.
Time of Supply for Interest, Late fee or Penalty
The time of supply for any interest, late fee or penalty for delayed payment as an addition consideration for the supplies made, is the date on which the supplier receives such addition in value.
Time of Supply in case Change in rate of tax
When there is a change in rate of tax, the time of supply shall be determined in the following manner:
1. Supply is made before the change in rate of tax
- Invoice is issued and payment is also received after the change in rate of tax – the time of supply will be the date of invoice or the date of payment – whichever is earlier.
- Invoice is issued before the change in rate of tax and payment is received after the change in rate of tax – the time of supply will be the date of invoice.
- Payment is received before the change in rate of tax and the invoice is issued after the change in rate of tax – the time of supply will be the date of receipt of payment.
2. Supply is made after the change in rate of tax
- Payment is received after the change in rate of tax but the invoice is issued before the change in rate of tax – the time of supply will be date of receipt of payment.
- Invoice is issued and payment is also received before the change in rate of tax – the time of supply shall be the date of receipt of payment or data of invoice – whichever is earlier.
- Invoice is issued after the change in rate of tax but the payment is received before the change in rate of tax – the time of supply shall be date of invoice.
PLACE OF SUPPLY OF GOODS
Section 10(1)(a) – Movement of Goods
- Supply involves Movement of Goods;
- Movement by any person i.e. Supplier, Recipient or Any Other Person:
- Place of Supply of such goods shall be the location of goods at the time at which the movement of goods terminates for delivery to the recipient;
Section 10(1)(b) – Persons stated for Bill to and for Ship to are differ from each other.
Where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person;
Section 10(1)(c) – Supply not involve movement of goods
- Supply does not involve movement of goods;
- Whether by the Supplier or the Recipient;
- Place of supply shall be the location of such goods at the time of the delivery to the recipient;
Section 10(1)(d) – Goods supplied and assembled or installed simultaneously
Where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly;
Section 10(1)(e) – Goods supplied on board
Where the goods are supplied on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, the place of supply shall be the location at which such goods are taken on board.
Example: Mr. Mehta is traveling on a cruise liner from Mumbai to Goa. He purchases a book from the in-house store in the cruise liner. These books were on-boarded from Mumbai. Registered place of business of the book shop is in Mumbai. Place of supply, in this case, will be Mumbai. This is an intrastate supply, and CGST and SGST will be charged.
QUESTION COVERED
Discuss the principles given under the Act to define the intra state supply?
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