VAT Guide to Value Added Tax - sri lanka inland revenue ...

3.4 Time of Supply
This is an important concept because VAT is charged at the time of supply. For the
purpose of the VAT Act it does not mean the time of physically delivering the goods or
performing the service. Time of supply by definition, varies according to the type of
supply. The supply of goods shall be deemed to have taken place ‘at the time of supply’
as defined below.
a
Supply of goods- the time of supply
If the invoice is issued within 10 days of the delivery of goods the time of supply
is
• the date of issue of invoice
If the invoice is issued after 10 days of the delivery of goods the time of supply is
the earliest happening of
• the date of invoice
• the due date of payment
• the date of receipt of payment/advance
• the date of delivery
b. Supply of Services – the time of supply
If the invoice is issued within 10 days of performing the service, the time of
supply is
• the date of issue of invoice
If the invoice is issued after 10 days of performing the service the time of supply
is the earliest happening of
• when the invoice is issued
• when the payment is due
• when the payment is received
• when the service is performed
Exception to the rule
If the transaction or part of the transaction falls within a taxable period prior to
31.07.2002 and GST has been paid on that transaction or part thereof then the
time of supply will not be considered on the above basis.
Example
Rent agreement entered into prior to 31.07.2002 and an advance paid on the date of
agreement. If GST has been paid on that advance and the balance is being paid monthly
during VAT period then the VAT is chargeable only on that balance as and when it is
paid. No adjustments will be made in respect of the periods under VAT which has been
paid in advance during GST regime.
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