spectrum-accounting-vat-general

VAT – Date of Supply Rules

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 15th January. Nihal LLC pays on 20th January. An invoice is issued on 22nd January. What is the tax point for this supply?

Answer: 15th 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 1st January. The supplier sends the Laptop on 4th January. On 6th January an invoice is issued showing full payment has been made. What is the tax point for this supply?

Answer: 1st 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 10th February and pays an advance of AED 3000 on the same day. The goods are delivered on 14th February and an invoice is issued for the balance on 20th February and the balance amount is paid on 22nd February.

  • Here first tax point arises upon payment of advance i.e. on 10th February and the tax point for the balance is on 14th

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