1. The concept of Time of Supply is an important pillar of GST as it determines, the date when the liability to payment arises. Section 12 and 13 govern the determination of time of supply of goods and services respectively and Section 14 determines the time of supply for goods and services in case there is a change in the rate of tax.
In this article , the provisions of the time of supply have been summarized and explain it in a tabulated manner:-
2. Section 12 of CGST Act – Time of Supply of Goods : –
| Sec 12(1) | The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section-12(1). | ||||
| Sec 12(2) | The time of supply of goods shall be the earlier of the following (a) or (b):- | ||||
| (a) The date of issue of invoice by the supplier | (b ) The last date on which the supplier is required, to issue the invoice under section 31 of the CGST Act.
The last date to issue the invoice:- As per Sec 31 of CGST Act, a registered person is required to issue tax invoice before or at the time of:- removal of goods for supply to the recipient or delivery of goods or making goods available to the recipient. Removal”, in relation to goods, means – dispatch of the goods for delivery by the supplier or collection of the goods by the recipient |
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| Example : Mr. S supplies goods to Mr. R on 25th April 2020 . The invoice for the said supply issued on 20th April 2020. The payment received on 30th April 2020. Time of supply is the earliest of –
1. Date of issue of invoice = 20th April 2. Last date on which invoice should have been issued = 25 April Thus the time of supply is 20th April. |
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| Sec 12(3) | Time of supply of goods when payment is on a reverse charge basis:-Supplies in respect of which tax is paid on a reverse charge basis, the time of supply shall be the earliest of the following dates: | ||||
| (a) the date of the receipt of goods, | (b) the date of payment as entered in the books of account of the recipient | (c ) the date on which the payment is debited in his bank account | (d) the date immediately following thirty days from the date of issue of invoice | ||
| Where it is not possible to determine the time of supply as above, the time of supply shall be the date of entry in the books of account of the recipient of the supply. | |||||
| Sec 12(4) | Time of Supply of Vouchers for goods: In the case of the supply of vouchers by a supplier, the time of supply shall be:-
(a) the date of issue of voucher, if the supply is identifiable at that point; (b) the date of redemption of voucher, in all other cases |
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| Sec 12(5) | Time of supply in other situations: In case it is not possible to determine the time of supply under any of aforesaid provisions, the time of supply shall:-
(a) in a case where a periodical return has to be filed, be the date on which such return is To be filed. (b) in any other case, be the date on which the CGST/SGST is paid |
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| Sec 12(6)
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Time of supply when interest, late fee or penalty for late payment is received: 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
Thus, the time of supply is not the date of demand issues to the recipient but the actual receipt of such interest, late fee at the supplier’s end. |
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3. Sec 13 of CGST Act – Time of Supply of Services :
| Sec 13(1) | The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of this section -13(1) | |||||
| Sec 13(2) | The time of supply of services shall be the earliest of the following (a) or (b):- | |||||
| (a) If the invoice is issued within the period prescribed ( 30 days from the date of supply of services ) under section 31(2) of CGST, earlier of the following (i) or (ii) | (b) If the invoice is not issued within the period prescribed under section 31(2) earlier of the following (iii) or (iv) | |||||
| (i) The date of issue of invoice by the supplier | (ii) The date of receipt of payment | (iii) the date of provision of service, | (iv) the date of receipt of payment, | |||
| Example, M/S XYZ ltd booked an exhibition hall and paid Rs 20000/- advance on 15th April. The exhibition was held on 30th May. The owner (supplier) raised an invoice for the balance amount of Rs 80000/- on 15th June and M/S XYZ paid balance amount on 30th June
(a) Invoice issued within 30 days of provision of service – the time of supply in respect of Rs 20000/- is 15th April (receipt of payment) & for Rs 80000/ it will be 15th June (date of issue of invoice) (b) In the above example, if invoice issued on 15th July ( after 30 days of provision of services ) time of supply for 80000/- will be 30th May ( date of provision of services |
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| Where the provisions of clause (a) or clause (b) do not apply. The time of supply of services will be the date on which the recipient shows the receipt of services in his books of account.
Explanation:- the date of receipt of payment is the earlier of the following:- (a) the date on which the payment is entered in the books of account of the supplier (b) the date on which the payment is credited to his bank account, |
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| Sec 13(3) | Time of supply of services when payment is on reverse charge basis: Supplies in respect of which tax is paid on a reverse charge basis, the time of supply shall be the earliest of the following (a) (b) & (c) | |||||
| (a) the date of payment as entered in the books of account of the recipient | (b) the date on which the payment is debited in his bank account | (c ) the date immediately following sixty days from the date of issue of invoice | ||||
| Example, M/s XYZ Ltd undertook the service of an advocate, Mr. R, on 15th April. The invoice was raised on 1st May. M/s XYZ Ltd made the payment on 1st Aug.
The time of supply, in this case, will be earliest of – 1. Date of payment = 1st Aug 2. 60 days from date of invoice = 29th June Thus, the time of supply of services is 29th June |
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| First Proviso to Sec 13(3) | Where it is not possible to determine the time of supply as above, the time of supply shall be the date of entry in the books of account of the recipient of the supply. first proviso to section 13(3) of the CGST Act. | |||||
| Second Proviso to Sec 13(3) | Service received from Associated Enterprise outside India – Time of supply of services will be earlier of the followings:-
(a) the date of entry in the books of account of the recipient of the supply (b) the date of payment Associated Enterprise is broadly defined as group companies participate in Management control |
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| Sec 13(4) | Time of Supply of Vouchers for services: In the case of the supply of vouchers by a supplier, the time of supply shall be:-
(a) the date of issue of voucher, if the supply is identifiable at that point; (b) the date of redemption of voucher, in all other cases |
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| Sec 13(5) | Time of supply in other situations: In case it is not possible to determine the time of supply under any of aforesaid provisions, the time of supply shall:-
(a) in a case where a periodical return has to be filed, be the date on which such return is to be filed, (b) in any other case, be the date on which the CGST/SGST is paid |
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| Sec 13(6) | Time of supply when interest, late fee or penalty for late payment is received :
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 Thus, the time of supply is not the date of demand issues to the recipient but the actual receipt of such interest, late fee at the supplier’s end. |
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4. Sec 14 of CGST Act – Time of supply in case of a change in Rate of tax: The GST Rates for goods and/or services keep changing from time to time. When supply happens during such a change in tax rates, the time of supply shall be determined in accordance with Sec 14 of the CGST Act.
There are two scenarios under this. The first scenario deals with the one where goods or services have been supplied before the change in the rate of tax. And the second scenario deals with the one where goods or services have been supplied after the change in the rate of tax.
Determination of the time of supply in both the scenario has been explained below in a tabulated manner:-
| Sec | Services Provided | Date of issue Of invoice | Date of Receipt of Payment | Time of Supply |
| Sec 14(a) | Before Change in Rate of Tax(B) | After change In rate(A) | After change In rate(A) | Receipt of Payment OR Issue of Invoice whichever is earlier |
| Before change In rate(B) | After change In rate(A) | Issue of Invoice | ||
| After change In rate (A) | Before change In rate (B) | Receipt of Payment | ||
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Sec 14(b) |
After Change in Rate of Tax(A) |
Before change In rate(B) | After change In rate (A) | Receipt of Payment |
| Before change In rate (B) | Before change In rate(B) | Receipt of Payment OR Issue of Invoice Whichever is earlier | ||
| After change In rate(A) | Before change In rate(B) | Issue of Invoice | ||
| The liability to pay tax arises at the time of supply. Hence the GST Rate applicable at the time of supply should be adopted for discharging liability. | ||||
4.1. It can be concluded that :
(a) If two out of the above three events (including the first event of supply of services ) take place before the change of the effective rate of GST, the second event shall be taken as the time of supply.
(b) If two out of the above three events (including the first event of supply of service) take place after the change of the effective rate of GST, the second event shall be taken as the time of supply.
(c) In any other case, the time of supply shall be the issue of invoice or receipt of payment whichever is earlier.
5. Other provisions related to the time of supply : GST if advance up to Rs 1,000 received can be paid at the time of issue of invoice – Where the supplier of taxable services receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess shall, at the option of the said supplier, be the date of issue of the invoice relating to such excess payment – proviso to section 13(2) of CGST Act.
Thus, in advance up to Rs 1,000 is received, GST is not payable at that stage. In that case, GST will be payable when the invoice is raised.
Disclaimer : Every effort has been made to keep the information cited in this article error free. Suggestions and feedback to improve the task are welcome.
The author can be approached at caanitabhadra@gmail.com
Part 8 of the series will cover the topic “ Valuation under section 15 of the CGST Act.
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