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Microlesson · 5-min read

Common Points - Interest/Penalty Addition, Residual & ₹1,000 Concession

# Common ToS Rules (Goods & Services)

## (1) Addition to Value: Interest / Late Fee / Penalty

When the consideration is enhanced by interest, late fee or penalty for delayed payment, ToS for that addition is:

> The date on which such addition is received by the supplier.

The ToS of the original supply remains as determined under the regular rules — only the add-on has its own ToS.

## (2) Residual Cases (when nothing else determines ToS)

SituationToS
Periodical return is to be filedDue date of return
No periodical return requiredDate on which GST is paid

## (3) ₹1,000 Concession (Excess Advance under FCM)

Where a supplier receives an advance for an FCM supply and the excess over invoice value is ≤ ₹1,000, the supplier may opt:

  • Date of receipt of payment as ToS for that excess, OR
  • Date of issue of invoice as ToS (i.e., ignore the small excess for current period).

This spares suppliers from raising tax invoices for trivial round-off advances.

Worked example

### Example 1

Ex – Interest on Delayed Payment

A Ltd. sold goods on 5 Apr for ₹10 lakhs. On 5 Sep, A Ltd. received ₹10 lakhs + ₹50,000 interest for delayed payment.

→ ToS of goods supply = 5 Apr (normal rule).

→ ToS of ₹50,000 interest addition = 5 Sep (date when received by supplier).

⚠️ Common exam mistakes

  • Adding the interest/penalty to the original transaction value and using the same ToS — the addition has its own ToS at the date of receipt.
  • Forgetting the ₹1,000 supplier-option rule only applies to FCM (and only when excess advance is ≤ ₹1,000).
  • In residual cases, defaulting to date of payment of tax even when periodical returns are filed (use return due date first).
Bare-Act text Section 12(6) / Section 13(6) · CGST Act, 2017 · click to expand
The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value.
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