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Determine Time, Value, and Place of Supply

Any activity carried out by the person falls under the definition of supply unless specifically excluded under the GST law, such as sales, transfer, manufacturing, barter, exchange, rental, or lease.
Place of Supply chain

Once a person is registered under GST, any activity carried out by the person – such as sales, transfer, manufacturing, barter, exchange, rental, or lease of goods and services that involves payment – falls under the definition of supply unless specifically excluded under the GST law.

For businesses and taxpayers, it is important to understand the concept of supply to determine the applicability of GST. Supply under GST has three attributes that are used to calculate the tax owed for the transaction of goods and services. These are the place, value, and time of supply.

Place of Supply

The place of supply is the place of delivery of goods or consumption of service. More specifically, it is the registered location of the recipient of a good or service.

The place of supply determines whether a transaction is an intra-state supply, an inter-state supply, or an external trade. This determination affects the  type of GST (a combination of CGST and SGST, or IGST) that will be associated with the sale of goods and services.

Provisions to determine the place of supply for goods and services are different; these differences are based on the variance in principles that authorities apply to them.

Time of Supply

Time of supply determines when the associated taxes and GST returns are due. There are separate provisions for time of supply for goods and time of supply for services. The liability to pay CGST and SGST on the services shall arise at the time of supply as determined by the GST provisions.

Value of Supply

The value of supply for a transaction is the price or amount paid by the customer to the supplier. It includes extra charges like shipping and handling, but it does not include GST.

The value of supply decides the taxable value of the supply delivered, and the amount of tax that needs to be paid for it.

The value of supply has been defined as the “transaction value” of the goods and services transferred between un-related parties. The value of supply shall include the following:

  • The basic consideration for the goods and services;
  • Any taxes, cess, duties, fees, and charges under any Act;
  • Any amount payable by the supplier for the recipient;
  • All ancillary or incidental expenses like packing, commission, etc.;
  • Subsidies, not federal or state government subsidies;
  • Interest, penalty or late fee charged for delayed payment; or
  • Any discounts that are given for the supply of goods and services, which were not known earlier.

Other discounts, which are linked to specific invoices, or were agreed upon at the time of entering into a contract, are allowed to be subtracted from the transaction value or the value of supply that determines the date of taxation.

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