Change in rate of tax in respect of supply of goods or services.

Section 14

Notwithstanding anything contained in section 12 or section 13, the time of supply, where there is a change in the rate of tax in respect of goods or services or both, shall be determined in the following manner, namely:—

• (a) in case the goods or services or both have been supplied before the change in rate of tax,—

  • (i) where the invoice for the same has been issued and the payment is also received after the change in rate of tax, the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; or

  • (ii) where the invoice has been issued prior to 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; or

  • (iii) where the payment has been received before the change in rate of tax, but the invoice for the same is issued after the change in rate of tax, the time of supply shall be the date of receipt of payment;

• (b) in case the goods or services or both have been supplied after the change in rate of tax,—

  • (i) where the payment is received after the change in rate of tax but the invoice has been issued prior to the change in rate of tax, the time of supply shall be the date of receipt of payment; or

  • (ii) where the invoice has been issued and payment is received before the change in rate of tax, the time of supply shall be the date of receipt of payment or date of issue of invoice, whichever is earlier; or

  • (iii) where the invoice has been issued after the change in rate of tax but the payment is received before the change in rate of tax, the time of supply shall be the date of issue of invoice:

Provided that the date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after four working days from the date of change in the rate of tax.

Explanation.—For the purposes of this section, "the date of receipt of payment" shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.

AI Explanation

In the world of taxation, understanding when the supply of goods or services is considered to have occurred is crucial. Even when faced with changes in tax rates, there are specific rules to determine the time of supply. Let's break down these rules for better clarity.

A. Supply Before Change in Tax Rate

If the goods or services were supplied before the change in tax rate, the time of supply is determined as follows:

1. Invoice Issued and Payment Received After the Change:

   • If the invoice has been issued, and payment is received after the change in tax rate, the time of supply is the earlier of the date of receipt of payment or the date of invoice issuance.

2. Invoice Issued Before Change, Payment Received After:

   • If the invoice was issued before the change in tax rate, but payment is received afterward, the time of supply is the date of invoice issuance.

3. Payment Received Before Change, Invoice Issued After:

   • If payment has been received before the change in tax rate, but the invoice is issued after the change, the time of supply is the date of payment receipt.

B. Supply After Change in Tax Rate

If the goods or services are supplied after the change in tax rate, the time of supply is determined as follows:

1. Payment Received After Change, Invoice Issued Before:

   • When payment is received after the change in tax rate, but the invoice was issued before the change, the time of supply is the date of payment receipt.

2. Invoice Issued and Payment Received Before Change:

   • If the invoice has been issued, and payment is received before the change in tax rate, the time of supply is the earlier of the date of receipt of payment or the date of invoice issuance.

3. Invoice Issued After Change, Payment Received Before:

   • When the invoice is issued after the change in tax rate, but payment is received before the change, the time of supply is the date of invoice issuance.

Provided Conditions for Payment Date:

If the credit in the bank account occurs after four working days from the date of the change in tax rate, that date will be considered as the date of payment.

Explanation:

For clarity on the term "date of receipt of payment," it is defined as the date when the payment is entered in the supplier's books of account or the date when the payment is credited to their bank account, whichever comes first. These rules ensure a systematic approach in determining the time of supply, especially during changes in tax rates.