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X Ltd received an advance of Rs 50,000 on 1 March 2024 against a future supply of goods worth Rs 5 lakh. Goods are dispatched on 10 April 2024 with invoice. Time of supply for the Rs 50,000 advance is:
A1 March 2024
B10 April 2024
CBoth dates proportionately
DNo time of supply till invoice
Answer & Solution
Correct answer: B. 10 April 2024
1. Sec 12(2) would normally make the earlier of invoice or payment the time of supply.
2. However, Notification 66/2017-CT exempts taxpayers (other than composition) from paying tax on advances received for goods — time of supply is solely the date of invoice.
3. Hence time of supply is 10 April 2024 when the invoice is issued. (Note: for services, advance still triggers tax.)
_Source: ICAI BoS CA Final Paper 8, Ch 4 "Time of Supply", §Sec 12(2) + Notf 66/2017-CT_
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