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

c. Time of supply in relation to supply under Agreements for the provision of
periodic payments (entered into after 01.04.1998 ) other than Hire Purchase
Agreements -
is
* when the payment is due or
* when the payment is received
which ever is earlier
d Supply under Hire purchase agreements – the time of supply
is
The time the agreement is entered into
e. Cash basis tax payers – the time of supply – Sec. 4(6)
For Registered Persons who have obtained approval to account for tax on cash
basis under Section 23, time of supply is, for the purpose of reporting output tax
in his returns is
* the time at which the payment is received.
3.5 Taxable supply
Means any supply of goods or services
• made in Sri Lanka or
• deemed to be made in Sri Lanka
• which is chargeable with VAT under the Act, and
• includes a zero-rated supply
• but not an exempt supply.
Exempt supplies are enumerated in schedule 1 to the Act. Zero-rated supplies are given
in section 7 of the Act (Vide Chapter 25). All other supplies (whether they are made or
deemed to be made) are taxable supplies, if it is in the course of carrying on or carrying
out a taxable activity. Section 16(5) of the Act sets out one situation where a deemed
supply can occur. That is, when the registration of a registered person is cancelled, the
goods or services remaining at the time of cancellation, which are part of the assets of
the taxable activity are deemed to have been supplied by that person. It is a case of a
deemed taxable supply. One characteristic of a deemed supply is that there is no
consideration in money (Please see para 1.5) Sometimes there may be no
consideration either in money or otherwise than in money. The Act does not enumerates
other instances of deemed supply. But from the context of the Act specially from Section
5(5)(iv) it can be said that, appropriation of business goods and assets for private use,
gift of business goods (other than samples), transfer of goods and assets from a taxable
activity to an exempt activity etc. are either supplies made or supplies deemed to be
made.
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