As we all know that from 25.01.2018 vide notification number 06/2018 CT-R the GST rate on precious stone (hereinafter refer as goods) reduce from 3% to 0.25%. Everybody in the market is in the market is in the confusion that at what rate they will charge on the goods supplied after the change in rate of tax and the goods supplied before the change in rate of tax.
So let us understand its impact of it on rate of GST applicable on the goods supply before the change in rate of tax and the goods supply after the change in rate of tax.
The rate of tax is decided on the basis of the time of supply as explained under section 12 of CGST act. But in case of change in rate of tax we will apply the provisions of section 14 instead of section 12 of CGST. While applying the provision of section 14 we will not look the provisions of section 12 as it override the provisions of that section.
Now let us understand the situation where you have supplied the goods before the change in rate of tax [Section 14 (a) ], now in that situation, date of invoice and the date of payment will play a major role to determine the time of supply. There are probably three situations you may face and these are as under:-
Situation: 1 Where goods or service was provided before change in rate of tax, also the invoice and payment is made after the date of change in rate of tax, then in that situation the earliest of the date of invoice or date of payment shall be the date of supply i.e. The rate enforceable on that day shall be the rate at which you have to charge tax in your invoice and paid it to govt. [Section 14(a) (i)]
Let us understand the situation through an example:-
Suppose Mr. X has supplied goods to Mr. Y for Rs. 80000/- on 23.01.2018 and Mr. X issued invoice to Mr. on 26.01.2017 and Mr. Y makes the payment on 27.01.2018 now the rate of tax on 23.01.2018 is. 3% and the rate of tax from / 26.01.2018 / 27.01.2018 is 0.25%. Now as per section 14(a) (i) the date of supply shall be the earliest of the date of payment or the date of invoice i.e. 26.01.2018 and will be taxable @0.25%.
Situation: 2 Where the goods or services was provided before the change and also invoice is issued before the change in rate of tax but payment is received after the change in rate of tax, the time of supply shall be the date of issue of invoice and the GST rate applicable on the date of issue of invoice shall be the applicable rate of tax on the transaction. [Section 14(a) (ii)]
Suppose Mr. A provide goods to Mr. B on 23.01.2018 and issue the invoice for the same on 24.01.2018 and Mr. B makes the payment on 27.01.2018, and the rate of tax on 23.01.2018 / 24.01.2018 is 3% and the rate of tax on 27.01.2018 is 0.25%. In such a situation the correct GST rate applicable on the transaction is 3% and not the 0.25% as per the section 14.
Situation: 3 Where the goods or services was provided before the change and also payment is received before the change in rate of tax but invoice is issued after the change in rate of tax, the time of supply shall be the date of receipt payment and the GST rate applicable on the date of receipt of payment shall be the applicable rate of tax on the transaction. [Section 14(a) (iii)]
Suppose Mr. A provide goods to Mr. B on 23.01.2018 and issue the invoice for the same on 27.01.2018 and Mr. B makes the payment on 24.01.2018, and the rate of tax on 23.01.2018 / 24.01.2018 is 3% and the rate of tax on 27.01.2018 is 0.25%. In such a situation the correct GST rate applicable on the transaction is 3% and not the 0.25% as per the section 14.
Summary of Section 14(a)
| Before the change in rate of tax | After the change in rate of tax | Time of supply
|
| — | Payment is received,
And Invoice is issued |
Earliest of the date of invoice or the date of payment |
| Invoice is issued | Payment is received | Date of invoice issued |
| Payment is received | Invoice is issued | Date of payment received |
Now in a case where you supply goods after the change in rate of tax [Section 14 (b)] , in situation also the rate of tax shall be determine on the basis of date of invoice and the date of payment. There are three possible situations under this situation and these are as follows:
Situation: – 1Where you supply goods or services after the change in rate of tax, and the invoice is issued before the change and payment is received after the change, the time of supply will be the date of payment and the rate of tax enforceable on that day shall be the rate of tax. [Section 14 (b)(i)].
Suppose Mr. A provide goods to Mr. B on 27.01.2018 and issue the invoice for the same on 24.01.2018 and Mr. B makes the payment on 28.01.2018, and the rate of tax on 24.01.2018 is 3% and the rate of tax on 27.01.2018 / 28.01.2018 is 0.25%. In such a situation the correct GST rate applicable on the transaction is 0.25% and not the 3% as per the section 14(b)(i).
Situation: – 2 Where you supply goods or services after the change in rate of tax, but payment is received and invoice is issued before the change in rate of tax then in such a situation the time of supply shall be the earliest of the date of payment and the date of invoice. [Section 14 (b)(ii)].
Suppose Mr. A provide goods to Mr. B on 27.01.2018 and issue the invoice for the same on 23.01.2018 and Mr. B makes the payment on 25.01.2018, and the rate of tax on 23.01.2018 / 25.01.2018 is 3% and the rate of tax on 27.01.2018 is 0.25%. In such a situation the correct GST rate applicable on the transaction is 3% and not the 0.25% as per the section 14(b)(ii).
Situation: – 3 Where you supply goods or services after the change in rate of tax and invoice is issued after the change in rate of tax but payment is received before the change in rate of tax, then in such a situation the time of supply shall be the date of invoice. [Section 14 (b)(iii)].
Suppose Mr. A provide goods to Mr. B on 27.01.2018 and issue the invoice for the same on 28.01.2018 and Mr. B makes the payment on 24.01.2018, and the rate of tax on 24.01.2018 is 3% and the rate of tax on 27.01.2018 / 28.01.2018 is 0.25%. In such a situation the correct GST rate applicable on the transaction is 0.25% and not the 3% as per the section 14(b)(iii).
Summary of Section 14(b)
| Before the change in rate of tax | After the change in rate of tax | Time of supply |
| Invoice is issued | Payment is received, | Date of payment received |
| Invoice is issued,
And Payment is received |
— | Earliest of the date of invoice or the date of payment |
| Payment is received | Invoice is issued | Date of invoice. |
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Situation: 3 Where the goods or services was provided before the change and also payment is received before the change in rate of tax but invoice is issued after the change in rate of tax, the time of supply shall be the date of receipt payment and the GST rate applicable on the date of receipt of payment shall be the applicable rate of tax on the transaction. [Section 14(a) (iii)]
Suppose Mr. A provide goods to Mr. B on 23.01.2018 and issue the invoice for the same on 27.01.2018 and Mr. B makes the payment on 24.01.2018,
Please inform whether one can supply goods wihtout invoice, how it is possible? provide goods on 213.1.2018 and invoice issued on 27.1.2018,please clear
Informative article
Very informative