Time of Supply in GST: EximGuru.com
Time of Supply in GST
Time of Supply
In order to calculate and discharge tax liability, it is important to know the date when the tax liability arises i.e. the date onwhich the charging event has occured. In GST law, it is knownas Time of Supply. The GST law has provided separate provisions to determine the time of supply of goods and time of supply ofservices. Section 12, 13 & 14 of the Central GST Act, 2017 (CGSTAct) deals with the provisions related to time of supply and byvirtue of Section 20 of the Integrated GST Act, 2017 (IGST Act)these provisions are also applicable for the IGST Act. Point oftime when supplier receives the payment or date of receipt ofpayment. The phrase “the date on which supplier receives thepayment” or “the date of receipt of payment” means the dateon which payment is entered in his books of accounts or the dateon which the payment is credited to his bank account, whicheveris earlier.
Time of issue of invoice for supply
As per section 31 of the CGST Act, an invoice for supply of goodsneeds to be issued before or at the time of removal of goods forsupply to the recipient, where the supply involves movement of goods. However, in other cases, an invoice needs to be issuedbefore or at the time of delivery of goods or while making goodsavailable to the recipient. Similarly an invoice for supply of servicesneeds to be issued before or after the provision of service but notlater than thirty days from the date of provision of service.
Time of supply of goods (Default Rule)
Earliest of the following dates:
- Date of issue of invoice by the supplier. If the invoice is notissued, then the last date on which the supplier is legallybound to issue the invoice with respect to the supply
- Date on which the supplier receives the payment
Time of supply of services (Default Rule)
Earliest of the following dates:
- Date of issue of invoice by the supplier (If the invoice is issuedwithin the legally prescribed period under section 31(2) of theCGST Act) or the date of receipt of payment, whichever isearlier
- Date of provision of service (If the invoice is not issued withinthe legally prescribed period under section 31(2) of the CGSTAct) or the date of receipt of payment, whichever is earlier
- Date on which the recipient shows the receipt of service in hisbooks of account, in case the aforesaid two provisions do notapply
The supply of goods or services shall be deemed to have beenmade to the extent it is covered by the invoice or by the payment,as the case may be. For example, Firm ‘A’ receives an advance ofRs. 2500/- on 29.07.17 for goods worth Rs. 10000/- to be supplied inthe month of September, then it is deemed that firm ‘A’ has madea supply of Rs. 2500/- on 29.07.17 and tax liability on Rs. 2500/- is tobe discharged by 20.08.17.
Although tax is payable on any advance received for a supply ofgoods or services, however for the convenience of trade, it isprovided that if a supplier of taxable goods or services receivesan amount upto Rs. 1000/- in excess of the amount indicated onthe tax invoice, then the supplier has an option to take the date ofissue of invoice in respect of such supply as the time of supply. Forexample, if a supplier has received an amount of Rs. 1500/- againstan invoice of Rs.1100/- on 25.07.17 and the date of invoice of nextsupply to the said recipient is 14.08.17, then he has an option totreat the time of supply w.r.t Rs. 400/- either as 25.07.17 or 14.08.17.
Time of supply of goods when tax is to be paid on reverse charge basis
Earliest of the following dates:
- Date of receipt of goods
- • Date on which the payment is entered in the books of accountsof the recipient or the date on which the payment is debited inhis bank account, whichever is earlier
- Date immediately following 30 days from the date of issue ofinvoice or any other legal document in lieu of invoice by thesupplier
However, if it is not possible to determine the time of supply inaforesaid manner, then the time of supply is the date of entry ofthe transaction in the books of accounts of the recipient of supply.
Time of supply of services when tax is to be paid on reverse charge basis
Earliest of the following dates:
- Date of payment as entered in the books of account of therecipient or the date on which the payment is debited in hisbank account, whichever is earlier
- Date immediately following 60 days from the date of issue ofinvoice or any other legal document in lieu of invoice by thesupplier
However, if it is not possible to determine the time of supply inaforesaid manner, then the time of supply is the date of entry ofthe transaction in the books of accounts of the recipient of supply.
Time of supply of services in case of supply by Associated Enterprises located outside India
In this case, the time of supply is the date of entry in the booksof account of the recipient or the date of payment, whicheveris earlier.
Time of supply in case of supply of vouchers
A voucher has been defined in the CGST Act as an instrumentwhere there is an obligation to accept it as consideration or partconsideration for a supply of goods or services or both, and wherethe goods or services or both to be supplied or the identities of theirpotential suppliers are either indicated on the instrument itself or inrelated documentation, including the terms and conditions of useof such instrument. Vouchers are commonly used for transactionin the Indian economy. A shopkeeper may issue vouchers fora specific supply i.e. supply which is identifiable at the time ofissuance of voucher. In trade parlance, these are known as singlepurpose vouchers. For example, vouchers for pressure cookers ortelevision or for spa or haircut. Similarly a voucher can be a generalpurpose voucher which can be used for multiple purposes. Forexample a Rs. 1000/- voucher issued by Shopper’s Stop store canbe used for buying any product or service at any Shopper’s Stopstore. The time of supply is different in case of single purposevoucher and in the case of general purpose voucher.
Time of supply in the case of single purpose voucher i.e. case wheresupply is identifiable at the time of issuance of voucher is thedate of issue of voucher. However, in all other cases of supply ofvouchers, the time of supply is the date of redemption of voucher.
Time of supply of goods or services (Residual provisions)
In case it is not possible to determine the time of supply underaforesaid provisions, the time of supply is:
- Due date of filing of return, in case where periodical return hasto be filed
- Date of payment of tax in all other cases.
Time of supply of goods or services related to an addition in the value of supply by way of interest, late fees or penalty
Time of supply related to an addition in the value of supply byway of interest, late fee or penalty for delayed payment of anyconsideration shall be the date on which supplier receives suchaddition in value. For example, a supplier receives consideration inthe month of September instead of due date of July and for suchdelay he is eligible to receive an interest amount of Rs. 1000/- and the said amount is received on 15.12.17. The time of supply ofsuch amount (Rs. 1000/-) will be 15.12.17 i.e. the date on which it isreceived by the supplier and tax liability on this is to be dischargedby 20.01.18.
Change in Rate of Tax in respect of supply of goods or services
The normal time of supply rules changes if there is a change in therate of tax of supply of goods or services. In this scenario, time ofsupply has to be determined in the following manner:
Supply is completed before the change in rate of tax
| Invoice issued before the date of change in tax rate | Payment received before the date of change in tax rate | Time of supply | Applicable rate of tax |
| No | No | Earliest of the date of invoice or payment | New rate of tax |
| Yes | No | Date of issue of invoice | Old tax rate |
| No | Yes | Date of receipt of payment | Old tax rate |
Supply is completed after the change in rate of tax
| Invoice issued before the date of change in tax rate | Payment received before the date of change in tax rate | Time of supply | Applicable rate of tax |
| Yes | Yes | Earliest of the date of invoice or payment | Old rate of tax |
| Yes | No | Date of receipt of payment | New rate of tax |
| No | Yes | Date of issue of invoice | New rate of tax |
Date of receipt of payment in case of change in rate of tax
Normally the date of receipt of payment is the date of creditin the bank account of the recipient of payment or the dateon which the payment is entered into his books of account,whichever is earlier. However, in cases of change in rate of tax,the date of receipt of payment is the date of credit in the bankaccount if such credit is after four working days from the date ofchange in rate of tax.