ACA Manisha Khandelwal
Introduction
Time of supply means the time when goods/services have been deemed to be supplied. Time of supply enables us to determine the rate of tax, value, and due dates for payment of taxes. 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.
The liability to pay CGST / SGST will arise at the time of supply as determined for goods and services. There are separate provisions for time of supply for goods and time of supply for services. Section 12, 13 & 14 of the CGST Act, 2017 and Section 20 of the IGST Act, 2017 deals with the provisions related to time of supply.
Time of supply of goods in case of Forward Charge
The time of supply of goods shall be the earliest of the following:
i. Date of issue of invoice; or
ii. Due date of issue of invoice under section 31 (1) of the CGST Act, 2017; or
iii. Date on which payment is entered in books of accounts of the supplier; or
iv. Date on which payment is credited to the bank account.
As per section 31(1) of the CGST Act, 2017, the due date for issuance of invoice would be as follows:
(a) Supply involves movement of goods- It is provided that the tax invoice should be issued before or at the time of removal of goods for supply to the recipient. As such, it is inferred that the date of removal of goods shall be the “due date of issuance of invoice”.
(b) Any other case- delivery of goods or making goods available to the recipient. As such, it is inferred that the date on which goods are delivered to the recipient or the date on which goods are made available to the recipient is the “due date of issuance of invoice”.
Exception:
If the supplier of taxable service receives an amount up to Rs. 1000 rupees in excess of invoice amount, the time of supply in respect of such excess at the option of the supplier shall be the date of such invoice (at the option of the supplier).
Time of supply of services in case of Forward Charge
The time of supply of services shall be the earliest of the following:
i. Date of issue of invoice; or
ii. Due date of issue of invoice under Section 31 (2) of the CGST Act, 2017; or
iii. Date when the payment entry in relation to supply of services is recorded in books of accounts; or
iv. Date on which the payment is credited to supplier’s bank account.
As per section 31(2) of the CGST Act, 2017 read with Rule 47 of the CGST Rules, 2017 – invoice of the taxable supply of services shall be issued within a period of thirty days from the date of the supply of service. Provided that where the supplier of services is an insurer or a banking company or a financial institution, including a non-banking financial company, the period within which the invoice or any document in lieu thereof is to be issued shall be forty five days from the date of the supply of service.
Time of supply of goods in case of Reverse Charge
The time of supply of goods for remittance of tax under reverse charge mechanism shall be the earliest of the following:
i. Date of receipt of goods by the recipient; or
ii. Date on which the payment is entered in the books of accounts of the recipient; or
iii. Date on which payment is debited in the bank account of the recipient; or
iv. Date immediately following thirty days from the date of issue 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 Reverse Charge
The time of supply of services for remittance of tax under reverse charge mechanism shall be the earliest of the following:
i. Date of payment recorded in the books of accounts;
ii. Date of debit in bank account;
iii. Sixty days from the date of issue of invoice or any other document by the supplier; or
iv. Date of entry in the books of accounts of the recipient.
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.
Where the supplies made 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 continuous supply of goods
Continuous supply of goods means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis.
The time of continuous supply of goods shall be the earliest of the following:
i. Date of issue of invoice; or
ii. Due date of issue of invoice under section 31 (4) of the CGST Act, 2017; or
iii. Date on which payment is entered in books of accounts of the supplier; or
iv. Date on which payment is credited to the bank account.
As per section 31(4) of the CGST Act, 2017, in case of continuous supply of goods, where successive statement of accounts (SOA) or successive payments are involved, the invoice shall be issued before or at the time each such statement is issued or as the case may be, each such payment is received.
Time of supply in case of continuous supply of services
Continuous supply of services means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations.
The time of supply of services shall be the earliest of the following:
i. Date of issue of invoice; or
ii. Due date of issue of invoice under Section 31 (5) of the CGST Act, 2017; or
iii. Date when the payment entry in relation to supply of services is recorded in books of accounts; or
iv. Date on which the payment is credited to supplier’s bank account.
As per section 31(5) of the CGST Act, 2017, in case of continuous supply of services-
(a) Where the due date of payment is ascertainable from the contract, the invoice shall be issued on or before the due date of payment.
(b) Where the due date of payment is not ascertainable from the contract, the invoice shall be issued before or at the time when the supplier of service receives the payment.
(c) Where the payment is linked to the completion of an event, the invoice shall be issued on or before the date of completion of that event.
Time of supply in case of Sale on approval basis
The time of supply of services shall be the earliest of the following:
i. Date of issue of invoice; or
ii. Due date of issue of invoice under Section 31 (7) of the CGST Act, 2017; or
iii. Date of acceptance given by the recipient; or
iv. Date on which payment is entered in books of accounts of the supplier; or
v. Date on which payment is credited to the bank account.
As per section 31(5) of the CGST Act, 2017, where the goods being sent or taken on approval for sale or return are removed before the supply takes place, the invoice shall be issued before or at the time of supply or six months from the date of removal, whichever is earlier.
Time of supply in case of supply of vouchers
The time of supply of vouchers shall be the earliest of the following:
i. Date of issue of voucher, if the supply is identifiable at that point; or
ii. Date of redemption of voucher, in all other cases.
Time of supply of goods or services (Residual provisions)
If it is not possible to determine the time of supply under any of the circumstances discussed, the time of supply is:
1. Due date of filing of return, in case where periodical return has to be filed
2. 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 supplier 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 the said amount is received on 15.12.17. The time of supply of such amount (Rs. 1000/-) will be 15.12.17 i.e. the date on which it is received by the supplier and tax liability on this is to be discharged by 20.01.18.
Change in rate of tax in respect of supply of goods or services
A summarized view on time of supply is given below when there is change in rate of tax on supply of goods or services;
| S. No | Event happens before change in tax rate | Event happens after change in tax rate | Place of supply |
| (A) | Goods/Services Supplied | Invoice issued
& Payment made |
Earlier of date of issue of invoice or payment |
| (B) | Goods/Services Supplied & Invoice issued | Payment made | Date of issue of invoice |
| (C) | Goods/Services Supplied & Payment made | Invoice issued | Date of payment |
| (D) | Invoice issued | Goods/Services Supplied & Payment made | Date of payment |
| (E) | Invoice issued & Payment made | Goods/Services Supplied | Earlier of date of issue of invoice or payment |
| (F) | Payment made | Goods/Services Supplied & Invoice issued | Date of issue of invoice |
Conclusion
This is a totally new concept under the existing taxpayer registered under VAT and Central excise. There are many considerations in determining time of supply under the GST Act. Thus, businesses will face a challenge in maintaining and reconciling between revenue as per financials and as per GST.
Worth Reading. Keep it up Manisha.