The Supply is key ingredient in GST law therefore it much relevant to know the ‘Time of Supply’ so that incident of tax liability can be determined on a particular time. The Chapter-IV of the CGST Act, 2017 (section 12 to 15) deal with time and valuation of supply:
- Section 12.Time of supply of goods.
- Section 13.Time of Supply of Services.
- Section 14.Change in rate of tax in respect of supply of goods or services.
Following is the summarized position of ‘Time of Supply’ for Goods and Services under GST Law.
| S. No. | Nature of Supply | In respect of goods | In respect of services | ||||||||||||||||||
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1.
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Normal Provision
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Earliest of the following:
(a) Date of issue of invoice by the supplier; (b) If invoice is not issued the last date on which supplier is required to issue the invoice [Sec. 31(1)]; (c) The date on which supplier receives the payment with respect to supply |
Earliest of following:
(a) Date of issue of invoice by the supplier; (b) If invoice is not issued, the last date on which supplier is required to issue the invoice (i.e. 30 days); (c) The date on which supplier receives the payment with respect to the supply. |
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| 2. | Supply of vouchers when the final supply is identifiable (single purpose vouchers) | Date of issue of voucher | Date of issue of voucher | ||||||||||||||||||
| 3. | Multi-purpose vouchers i.e. the precise supply is not identifiable | Date of redemption of voucher | Date of redemption of voucher | ||||||||||||||||||
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4.
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Reverse charge taxation
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Earlier of the following dates:
a) receipt of goods; b) payment; c) date immediately following 30 days of invoice date If cannot be done as above: the date of entry in accounts |
Earlier of the following dates:
a) payment; b) date immediately following 60 days of invoice date If cannot be done as above: the date of entry in accounts. |
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| 5. | In case of ‘associated enterprises’ located outside India | Not applicable | Earlier of the following:
a) date of entry in books of accounts; or b) date of payment; |
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| 6. | Levy of interest, late fees or penalty for delay in payment of consideration | Date on which the supplier receives such addition to value | Date on which the supplier receives such addition to value |
The Time of Supply in Case of Change in Rate of Tax
Section 14 of CGST Act 2017 deal with ‘Time of Supply’ in case change in Rate of Tax in respect of Supply of Goods or Services. The summarized provision of this section is as under:
| Scenario | Issue of Invoice | Receipt of payment | Time of Supply |
| CASE-I: Where the Goods or Services or both have been supplied Before the change in Rate of Tax | After the change in Rate of Tax | After the change in Rate of Tax | Date of payment or date of invoice, whichever is earlier |
| Before change in Rate of Tax | After change in Rate of Tax | Date of invoice | |
| After change in Rate of Tax | Before change in Rate of Tax | Date of payment | |
| CASE-II: Where the Goods or Services or both have been supplied After the change in rate of tax | Before change in Rate of Tax | After change in Rate of Tax | Date of payment |
| Before change in Rate of Tax | Before change in Rate of Tax | Date of payment or date of invoice, whichever is earlier | |
| After change in Rate of Tax | Before change in Rate of Tax | Date of Invoice | |
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 on which the charging event has occurred. In GST law, it is known as Time of Supply. GST law has provided separate provisions to determine the time of supply of goods and time of supply of services. Sections 12, 13 & 14 of the CGST Act, 2017, deals with the provisions related to time of supply and by virtue of section 20 of the IGST Act, 2017, these provisions are also applicable to inter-State supplies leviable to Integrated tax.
Point of time when supplier receives the payment or date of receipt of payment
The phrase “the date on which supplier receives the payment” or “the date of receipt of payment” means the date on which payment is entered in books of accounts of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.
Time of issue of invoice for supply
As per section 31 of the CGST Act, 2017 an invoice for supply of goods needs to be issued before or at the time of removal of goods for supply to the recipient where the supply involves movement of goods. However, in other cases, invoice needs to be issued before or at the time of delivery of goods or making available goods to the recipient.
Similarly, an invoice for supply of services needs to be issued before or after the provision of service but not later 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 invoice is not issued, then the last date on which supplier is legally bound to issue the invoice with respect to the supply.
· Date on which supplier receives the payment.
Section 148 of the CGST Act, 2017, confers powers on the government (on the recommendation of the GST Council) to notify certain classes of registered persons and the special procedures to be followed by such persons including those with regard to registration, furnishing of return, payment of tax and administration of such persons. In exercise of powers conferred by this section, the government on the recommendations of the GST Council has notified the registered persons (who have not opted for composition levy) as the class of persons who shall pay GST on outward supply of goods at the time of supply specified in clause (a) of sub-section
(2) of Section 12. Thus, in respect of supply of goods by normal registered persons (other than composition dealers), the time of supply will be the issue of invoice (or the last date by which invoice has to be issued in terms of Section 31) Therefore, all taxpayers (except composition taxpayers) are exempted from paying GST at the time of receipt of advance in relation to supply of goods. The entire GST shall be payable only when the invoice is issued for such supply of goods. The special procedure will be applicable to this class of persons (registered persons making supplies of goods other than composition dealers) even in situations governed by Section 14 of the Act (change in rate). Notification no. 66/2017-Central Tax dated 15.11.2017 may be referred to.
Time of supply of services (Default Rule)
Earliest of the following dates
· If the invoice is issued within the legally prescribed period under section 31(2) of the CGST Act, 2017 read with Rule 47 of CGST Rules, 2017 (which is thirty days from the date of the supply of service), then the date of issue of invoice by the supplier or date of receipt of payment, which ever is earlier.
· If the invoice is not issued within the legally prescribed period under section 31(2) of the CGST Act, 2017 then the date of provision of service or date of receipt of payment, whichever is earlier.
· Date on which recipient shows the receipt of service in his books of account, in a case aforesaid two provisions do not apply.
The supply of services shall deemed to have been made 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 of Rs. 2500/- on 29.07.2017 for provision ofservices worth Rs. 10000/- to be supplied in the month of September, then it is deemed that firm ‘A’ has made a supply of Rs. 2500/- on 29.07.2017 and tax liability on Rs. 2500/- is to be discharged by 20.08.2017.
Although tax is payable on any advance received for a supply of services, however for the convenience of trade it is provided that if a supplier of taxable services receives an amount up to Rs. 1000/- in excess of the amount indicated on the tax invoice, then the supplier has an option to take the date of issue of invoice in respect of such supply as time of supply. For example, if a supplier has received an amount of Rs. 1500/- against an invoice of Rs.1100/- on 25.07.2017 and date of invoice of next supply to the said recipient is 14.08.2017, then he has option to treat the time of supply w.r.t Rs. 400/- either as 25.07.2017 or 14.08.2017.
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 payment is entered in the books of accounts of the recipient or the date on which the payment is debited in his bank account, whichever is earlier.
· Date immediately following 30 days from the date of issue of invoice or any other legal document in lieu of invoice by the supplier.
However, if it is not possible to determine the time of supply in aforesaid manner then the time of supply is the date of entry of the 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 the recipient or the date on which the payment is debited in his bank account, whichever is earlier
· Date immediately following 60 days from the date of issue of invoice or any other legal document in lieu of invoice by the supplier.
However, if it is not possible to determine the time of supply in aforesaid manner then the time of supply is the date of entry of the 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 books of account of the recipient or the date of payment, whichever is earlier.
Time of supply in case of supply of vouchers
Voucher has been defined in the CGST Act, 2017 as an instrument where there is an obligation to accept it as consideration or part consideration for a supply of goods or services or both and where the goods or services or both to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument. Vouchers are commonly used for transactions in the Indian economy. A shopkeeper may issue vouchers for specific supply i.e. supply is identifiable at the time of issuance of voucher. In trade parlance, these are known as single purpose vouchers. For example, vouchers for pressure cookers or Television or for spa or haircut. Similarly, a voucher can be general purpose voucher which can be used for multiple purposes. For example, a Rs. 1000/- voucher issued by Shoppers’ Stop store can be used for buying any product at any Shoppes’ Stop store. Time of supply is different in case of single purpose voucher and in the case of general purpose voucher.
Time of supply in the case of single purpose voucher i.e. case where supply is identifiable at the time of issuance of voucher is date of issue of voucher. However, in all other cases of supply of vouchers, time of supply is 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 under aforesaid provisions, the time of supply is,-
· Due date of filing of return, in case where periodical return has to 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 by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which suppliers receives such addition in value. For example a supplier receives consideration in the month of September instead of due date of July and for such delay he is eligible to receive an interest amount of Rs. 1000/- and said amount is received on 15.12.2017. The time of supply of such amount (Rs. 1000/-) will be the 15.12.2017 i.e. the date on which it is received by the supplier and tax liability on this is to be discharged by 20.01.2018.
Change in Rate of Tax in respect of supply of goods or services
Where there is a change in rate of tax of supply of goods or services, time of supply has to be determined in the following manner:-
Supply is completed before the change in rate of tax
| Invoice issued before date of change in tax rate | Payment received before 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 date of change in tax rate | Payment received before date of change in tax rate | Time of sup- ply | 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 |
However, the special procedure for payment of tax by suppliers of goods (other than composition dealers) notified by Government vide notification no. 66/2017-Central Tax dated 15.11.2017 under section 148 of the CGST Act, 2017, will continue to govern even in the above situation. In a nutshell, suppliers of goods other than composition dealers will have to pay tax at the time of issue of invoice only.
Date of receipt of Payment in case of change in rate of tax
Normally the date of receipt of payment is the date of credit in the bank account of the recipient of payment or the date on which the payment is entered into his books of account, whichever is earlier. Further, the date of credit in the bank account is relevant if such credit is after four working days from the date of change in rate of tax.
