VAT – Date Of Supply Rules | Spectrum Accounts

Date of Supply:

Date of supply plays a vital role in VAT legislation, as it gives the date on which goods are sold and services are rendered and subsequently when tax obligation becomes due (Tax point) i.e. when Output Tax is required to be paid.

Date of supply – General Cases:

S.No	In Case of	Point of taxation
1.	Goods transferred under the supervision of the supplier.	Ø Date on which Goods were transferred. Ø Date on which the Tax Invoice was issued. Ø Date of receipt of payment whichever is earlier.
2.	Goods transferred was not under supervision of the supplier.	Ø Date on which the Recipient of Goods took possession of the Goods. Ø Date on which the Tax Invoice was issued. Ø Date of receipt of payment whichever is earlier.
Example: 1. Question: Sajith LLC supplies toys to Nihal LLC on 15^th January. Nihal LLC pays on 20^th January. An invoice is issued on 22^nd January. What is the tax point for this supply? Answer: 15^th January, as it is the date on which the goods are received by the customer. 2. Question: Spectrum LLC purchases a Laptop online quoting debit card number on 1^st January. The supplier sends the Laptop on 4^th January. On 6^th January an invoice is issued showing full payment has been made. What is the tax point for this supply? Answer: 1^st January, as the payment is made earlier than the date of supply and invoice.
3.	Goods supplied with assembly and installation	Ø Date on which assembly or installation of the Goods was completed Ø Date on which the Tax Invoice was issued. Ø Date of receipt of payment whichever is earlier.
4.	Imported goods	Ø Date on which the Goods are Imported under the Customs Legislation. Ø Date on which the Tax Invoice was issued. Ø Date of receipt of payment whichever is earlier.
5.	Goods supplied on returnable basis	Ø Date on which the Recipient of Goods accepted the supply Ø Date no later than (12) months after the date on which the Goods were transferred or placed under the Recipient of Goods disposal. Ø Date on which the Tax Invoice was issued. Ø Date of receipt of payment whichever is earlier.
6.	Provision of services	Ø Date on which the provision of Services was completed. Ø Date on which the Tax Invoice was issued. Ø Date of receipt of payment whichever is earlier.

Date of Supply – Special Cases:

S.No	In Case of	Point of taxation
1.	Supply of Goods or Services for any contract that includes periodic payments or consecutive invoices	Ø Date of issuance of any Tax Invoice. Ø The Date payment is due as shown on the Tax Invoice. Ø The date of receipt of payment. whichever is earlier (provided, the date does not exceed one year from the date of the provision of such Goods and Services)
2.	Payment made through vending machines	Ø Date on which funds are collected from the machine.
3.	Deemed Supply of Goods or Services	Ø Date of their supply Ø Date of their disposal Ø Date of their change of usage (or) Ø Date of Deregistration as the case may be.
4.	Supply of a voucher	Ø Date of issuance or supply thereafter

More than one tax point for the same supply: It is possible to have more than one tax point for the same supply, for instance, where a deposit is paid upfront and the balance upon delivery of goods.

Example:

ABR interior LLC orders some equipment on 10^th February and pays an advance of AED 3000 on the same day. The goods are delivered on 14^th February and an invoice is issued for the balance on 20^th February and the balance amount is paid on 22^nd February.