In this article, I have tried to cover various scenarios in a Tabular form as to when goods & services shall become taxable under the New Model GST law.
It is worthwhile to note that the existing indirect taxes like Excise, VAT and Service Tax are taxable as per the relevant provisions of their specific acts/statues which define different scenarios & determinants as to when the goods or services should be taxable.
E.g. Excise duty becomes payable at the time when goods are removal of goods from the factory;
VAT becomes payable when the title in the goods is transferred to another person;
Service Tax basis the provisions of Point of Taxation Rules.
GST shall be subsuming all such indirect taxes and hence it is imperative to understand various scenarios & determinants when the Goods or Services shall be taxable under the new GST Regime. The answer lies in understanding Time of Supply Rules for Goods & Services as specified in Chapter IV of Draft GST Law. These rules shall be the determinants of the point in time when the goods & services shall become taxable.
Below is the simplified tabular representation of the point in time when the goods and services shall become taxable as per the new GST regime.
Conclusion: It is worthwhile here to note that scenarios here like Date of Receipt of goods / services in books of accounts by Recipient which were never in the existing indirect tax laws shows clearly the intention of government to increasing the tax base & making it a form of advance tax.
However question arises what happens if the receipt of goods shown by recipient is at an X price & the final Invoice has X+Y at the final price. Will there be some sort of adjustments? Further what scenarios does S13 (2) (c) cover’s for Non Continuous Supply of Services. These questions are yet to be answered.
Hopefully, these will get clarified subsequently.
Note: – Reliance & reference has been made on Draft GST Law Chapter IV, the contents are subject to change upon the release of the Final draft of Model GST Law.