When change of Rate of Tax under GST, how to determine tax liability with new rate as per Recent Notifications issued by the CBIC under GST

You all aware that recently CBIC has given certain notifications with regard to change of rate of taxes under GST as per 47th GST Council recommendations, middle of the month, i.e.18.07.2022. Some of our colleagues raised doubts about how to determine tax liability with new rates as per Recent Notifications issued by the CBIC under GST.. So, I have thought to prepare an article on the above subject.

Recently, 47th GST Council made certain recommendation, with regards to change of rate of rate of taxes on supply of goods and services or both, based recommendations CBIC has given notifications under Central Tax (Rates) on 13.07.2022 So, the taxpayer raised tax invoices with appropriate rate of tax as per Notifications, at the time of supply of goods or services on such supplies under GST Law.

To determine correct rate on supply, we need to determine correct time of supply. So, at the time of raise Tax Invoice, taxpayer shall mentioned time of supply as per Invoice as per Section 12 and 13 of CGST Act 2017.

Liability of GST is based on “Time of Supply”.

Time of supply fixes the point when the liability to charge GST arises. It also signifies when a supply is deemed to have been made.

Section 12(2) of CGST Act,2017, state that the time of supply of goods shall be the earlier of the following dates, namely:-

  • The date of issue of invoice by the supplier or the last date on which he is required, under sub-section 31, to issue the invoice with respect to the supply. or
  • The date on which the supplier receives the payment with respect to the supply, Provided that where the supplier of taxable goods receives an amount up to Rs.1,000/- in excess of the amount indicated in the tax invoice, the time of supply to the extent of such amount shall, at the option of the said supplier, be the date of issue of invoice in respect of such excess amount.

Explanation-1: For the purposes of clauses (a) and (b), the supply shall be deemed to have been made to the extent it is covered by the invoice or , as the case may be, the payment.

Explanation-2: For the purpose of clause (b),”the date on which the suppler receives the payment” shall be the date on which the payment is entered in his books of accounts or the date on which the payment is credited to his bank account, whichever is earlier.

Time of supply in case of REVERSE CHARGE under CGST Act,2017:

Section 2(38) of the CGST Act,2017, states that “reverse charge “means the liability to pay tax by the recipient of supply of goods or services or both under sub-section (3)or sub-section (4) of Section 9, or under sub-section(3) or subsection (4) of section 5 of the IGST Act,2017.

Time of supply in case of Goods:

Section 12(3) of the CGST Act,2017,states that ,in case of supplies in respect of which tax is paid or liable to be paid on RCM basis, the time of supply shall be the earliest of the following dates:-

  • The date of the receipt of goods, or
  • The date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account , whichever is earlier, or
  • The date immediately following 30 days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier,

Provided that where it is not possible to determine the time of supply under clause (a)or clause (b) or clause (c) , the time of supply shall be the date of entry passed in the books of accounts of the recipient of supply.

Time of supply in case of Services:

Section 13(3) of the CGST Act,2017,states that, in case of supplies in respect of which is paid or liable to be paid on RCM basis, the time of supply shall be the earlier of the following dates:-

  • The date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his books of accounts, whichever is earlier, or
  • The date immediately following 60 days from the date of issue of invoice or any other document, by whatever name called , in lieu thereof by the supplier,

Change of Rate of Tax under GST, how to determine tax liability with new rate

Provided that where it is not possible to determine the time of supply under clause (a) or clause (b), the time of supply shall be the date of entry in the books of account of the recipient of supply.

Provided further that in case of supply by “associated enterprises “, where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply  or the date of payment, whichever is earlier.

With the help of following table we can determine time of supply in case of change in rate of tax.

Case Events before change in effective rate of tax Events after change in effective rate of tax Time of supply if goods & services are supplied before change in effective rate of tax Time of supply if goods & services are after change in effective rate of tax
1 Invoice issued/Payment Received No activity Ø  Date of receipt of payment or

Ø  Date of issue of invoice whichever is earlier

             N A
2 Invoice Issued / Payment Received Supply of Goods & Services        N A Ø  Date of receipt of payment or

Ø  Date of issue of Invoice whichever is earlier

3 Invoice issued Payment Received Date of Invoice Date of receipt of payment
4 Payment Received Invoice Issued Date of receipt of Payment Date of Invoice

Disclaimer: The contents of this article have been prepared on the basis of notifications issued by the CBIC on 05.07.2022 and 13.07.2022 under CGST Act,2017. Although care has been taken to ensure the accuracy, completeness and reliability of the information available, the author assumes no liability. Therefore, users of this information are expected to refer the relevant law, the information as given in no case shall be constructed as a professional advice or opinion.

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