Change in GST Rate

GST RATE CHANGE

Change in the rate of tax in respect of goods or services or both under GST

Due to recent change in rate of GST there is ambiguity regarding the applicablity of old and new rate of tax .So in this article I have tried to simplify that ambiguity regarding old and new rates applicablity.

As per Notification Nos.

• 41/2017 CGST (RATE) dt.14/11/2017
• 42/2017 CGST (RATE) dt.14/11/2017
• 43/2017 CGST (RATE) dt.14/11/2017
• 44/2017 CGST (RATE) dt.14/11/2017
• 45/2017 CGST (RATE) dt.14/11/2017
• 46/2017 CGST (RATE) dt. 14/11/2017
• 43/2017 IGST (RATE) dt.14/11/2017
• 44/2017 IGST (RATE) dt.14/11/2017
• 45/2017 IGST (RATE) dt.14/11/2017
• 46/2017 IGST (RATE) dt.14/11/2017
• 47/2017 IGST (RATE) dt.14/11/2017
• 48/2017 IGST (RATE) dt.14/11/2017

Applicable from 15/11/2017, there is change in rates for various goods and services.

Section 14 of CGST Explains the treatment of Change in rate of tax in respect of supply of goods or services.

Statutory Provision

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.

Analysis

Section 14 start with notwithstanding anything contained in section 12 or section 13. That means its overrule the section and conditions mentioned under section 12 and 13 of the said Act. So normal manner of time of supply is not applicable in case of Rate change in rate of Tax. Further to know the applicability of TAX RATE there is three events-

• Date of supply of goods or services
• Date of issue of invoice
• Date of payment for the supply

Whichever two events occurs together, rate will be applicable as per that only.

Example: Rate of GST on or after 15/11/2017 reduced from 28% to 18% .

• Before of rate change = B
• After of rate change = A

THUMB RULE:

• If any of two events occurred before rate change = OLD RATE
• If any of two events occurred after rate change = NEW RATE