ICWA(CMA) Coaching Classes Fees

GST – Time of Supply

Introduction

GST – Time of Supply: Point In time When the liability to pay tax arises

Who shall pay: Taxable Person

• On what GST shall be paid: Supply of Goods and services – Section 7

• When GST shall be paid: Point of Supp.ly

• Where shall GST be paid: Place of Supply

• To whom shall it be paid: Respective Government

• How to Pay: Cash / Credit

Time of Supply of Goods

Generally Earlier of
Date of issue of invoice or last date on which the invoice was required to be issued
Date of receipt of payment

In case of Reverse Charge

Earlier of
Date of receipt of goods
Date of payment
From the date of issue of the invoice Date immediately following 30 days.

Time of Supply

In case of Supply of vouchers
Date of issue of the voucher, if the supply is identifiable at that point
Date of redemption of the voucher, in all other cases

In case of receipt of additional value of supply in the form of
Residual
In the case where a periodical return has to be filed, the date on which such return is to be filed

In any other case,

the date on which CGST/SGST is paid

Time of Supply of Goods – Last date for issue of invoice

Last date of issue of invoice

Concerning the removal
Goods removed Date of removal
Goods are not removed Date on which goods are made available

The continuous supply of Services
statements of accounts or successive payments
Goods sent on approval
before or at the time of supply
Six months from the date of removal

Continuous Supply of Goods

Section 2(32) defines “continuous supply of goods” means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis and includes supply of such goods as the Government may, subject to such conditions, as it may, by notification, specify

Continuous Supply of Goods
Notification No. 40/2017 – Central Tax dt. Oct 13, 2017
registered person whose aggregate turnover in the preceding financial year did not exceed one crore and 5000000 rupees or the registered person whose aggregate turnover in the year in which such person has obtained registration is likely to be less than 15000000 rupees and who did not opt for the composition levy under section 10 of the said Act as the class of persons who shall pay the central tax on the outward supply of goods at the time of supply as specified in clause (a) of sub-section (2) of section 12 of the said Act including in the situations attracting the provisions of section 14 of the said Act,

Time of supply of services

In case invoice issued within the prescribed time, earlier of

ï?·the date of issue of an invoice by the supplier or
ï?·the date of receipt of payment

a)In case of the invoice is not issued within the prescribed time, earlier of
ï?·the date of provision of service
ï?·the date of receipt of payment

A continuous supply of Services

When due date of payment is ascertainable, on or before the due date of payment;
a.else, date of receipt of payment;

Where the payment is linked to the completion of an event, date of the end of that event.
Time of Supply of Services

Time of Supply of Services
Supply ceases before completion time when the amount ceases

In case of Reverse charge

the date of payment
the date immediately following 60 days from the date of issue of invoice

Supply of vouchers
Date of issue of the coupon, if the amount is identifiable at that point
Time of redemption of the voucher, in all other cases

Residual
In the case where a periodical return has to be filed, the date on which such return is to be submitted
In any other case, the date on which CGST/SGST is paid

Continuous Supply of Services

Section 2(33) “continuous supply of services” means a supply of services which is provided, or agreed to be delivered, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and includes supply of such services as the Government may, subject to such conditions, as it may, by notification, specify;

Additional Consideration Section further provides that the time of Supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value. Thus, any additional consideration for any supply of services shall be taxable at the time when such additional consideration is received.

Time of supply of services – rate change

Supply Issue of invoice Receipt of payment
Time of supply Before the change in the rate of tax
After the difference in the rate of tax
Date of receipt of payment, or date of issue of invoice, whichever is earlier Before the change in the rate of tax

What are the Statutory Provisions relating to the Transfer of Profits to Reserves?

Answer:

As per companies Act, 2013 there is no requirement of minimum transfer of profits to reserves. The company can transfer any amount of profits to reserves as per its own judgement before paying dividends.

 Depreciation is calculated from the period when the asset is put to use as per INCOME TAX Act.

Managerial Remuneration: Section 197 AND SCHEDULE V prescribes overall maximum managerial remuneration. Managerial personnel means directors on the board of directors.

Summary of different limits based on net profit of the company is :

SALARY

Relationship of the receiver with payer: Income under head salary is taxable only if there is employer, employee relationship between payer and payee. And this relation is said to exist only if there is control over the method of doing the work of other person.

Control is said to exist if the payer can direct what has to be done, when, how and by whom it has to be done, and the receiver is bound to follow all his instructions. This relationship is also called master - servant or principal - agent relationship.

Few common examples when there is no control of payer over payee are:

• Partner of a firm-any salary, bonus etc. by whatever name called received by a partner from the firm shall not be regarded as salary.
• Director who is not employee.
• Members of Parliament.
• Guest Lecturers etc.

  In all the above cases income of the receiver is not taxable under head salary.

  Taxability of Salary:

Employer includes:

• Former
• Present
• Prospective Employer

No Intention to Pay:

Agreement between teacher and management to pay salary to employee and another agreement by which an identical sum has to be returned by the same teacher doesn’t constitute salary because here salary is not real but fictitious. (Actual intention to pay is important)

More than one Employer:

• Salary from each source is taxable under the head salary.
• Ex: Mr. A works in two places as part time job. His salary from both places is calculated under the head’s salary.

Salary and Wages:

From income tax point of view there is no difference between salary and wages.

Contract of Service Vs Contract for Service

Wherever there exists employer-employee relationship there is a “Contract of Service”. In this employer can control and direct the work to be performed by employee. In this income received by a person shall be regarded as salary. Where there is no employer – employee relationship then two people enjoy the relationship of “Contract for Service”. In this the contractee can only be told what is to be done. There can be no specific instructions about how it is to be done. In this case income shall be taxable as income of business and profession or income of other sources.

“Contract of Service” employer, employee relationship whereas “Contract for Service” doesn’t result in such a relationship. Therefore any income from such relation is not to be taxed under this head of income.

Basis of Charge[Section 15]

Salary is taxable on receipt or due basis whichever is earlier.

Salary from more than one source

If an individual receives salary from more than one employer during the same previous year (maybe due to change in employment or due to employment with more than one employer simultaneously), salary from each source is taxable under the head “Salaries”. For instance, if a clerk works with two employers on part time basis, salary from both the employers will be chargeable to tax under the head “Salaries”.

Salary due or Received in foreign currency

If the Salary is earned in foreign currency, it will be converted into rupees.

• Conversion rate: Buying rate on specified date.
• Specified date: Last date of the month immediately preceding the month in which the salary is due / paid in advance / paid in arrears.

Computation of the salary in grade system

Ex: If any employee joins the service on 1-5-2013 and is placed in the grade of Rs.32,500 – 500 – 38,000 – 800 – 44,000. It means that:

• He will get a basic salary of Rs.32,500 w.e.f 1-5-2013.
• He will get annual increment of Rs.500 p.m. w.e.f. 1-5-2014 & onwards till his salary reaches Rs. 38,000
• Thereafter, he will get on annual income incremental of Rs. 800 p.m. till his salary reaches Rs. 44,400.
• No further increment will be given thereafter till he is placed in other grade.