Introduction to Section 14 – Change in Rate of Tax
Section 14 of the Central Goods and Services Tax Act, 2017 is a special provision dealing with situations where there is a change in the rate of GST on goods or services. Since GST liability is determined based on the “time of supply”, any variation in the tax rate creates uncertainty about whether the old rate or the new rate should apply to a particular transaction.
To address this, Section 14 lays down specific rules for determining the time of supply when the rate of tax changes. It overrides the general provisions of Section 12 (time of supply of goods) and Section 13 (time of supply of services), and provides a clear mechanism for deciding which rate is applicable.
This section is particularly important because:
- GST rates are revised from time to time by the GST Council.
- Transactions often span across different dates for supply, invoice, and payment.
- Businesses need certainty to correctly charge and deposit tax, avoiding disputes and penalties.
In essence, Section 14 ensures a smooth transition from the old rate to the new rate by applying the principle that “two out of three events (Supply, Invoice, Payment) decide the applicable rate.”
Section 14 – Change in Rate of Tax (CGST Act, 2017)
Statutory Provision
Section 14. Change in rate of tax in respect of supply of goods or services
Notwithstanding anything contained in section 12 or section 13, the time of supply, where there is a change in the rate of tax in respect of goods or services or both, shall be determined in the following manner, namely:–
(a) in case the goods or services or both have been supplied before the change in rate of tax:
1. where the invoice for the same has been issued and the payment is also received after the change in rate of tax, the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; or
2. where the invoice has been issued prior to the change in rate of tax but payment is received after the change in rate of tax, the time of supply shall be the date of issue of invoice; or
3. where the payment has been received before the change in rate of tax, but the invoice for the same is issued after the change in rate of tax, the time of supply shall be the date of receipt of payment;
(b) in case the goods or services or both have been supplied after the change in rate of tax:
1. where the payment is received after the change in rate of tax but the invoice has been issued prior to the change in rate of tax, the time of supply shall be the date of receipt of payment; or
2. where the invoice has been issued and payment is received before the change in rate of tax, the time of supply shall be the date of receipt of payment or date of issue of invoice, whichever is earlier; or
3. where the invoice has been issued after the change in rate of tax but the payment is received before the change in rate of tax, the time of supply shall be the date of issue of invoice.
Provided that the date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after four working days from the date of change in the rate of tax.
Explanation.– For the purposes of this section, “the date of receipt of payment” shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.
Interpretation & Practical Understanding
The section ensures clarity when GST rates change by fixing the time of supply (TOS) depending on whether supply is before or after the change, and how invoice and payment are timed.
Key Principle (“Golden Rule”)
- Check three events: Supply, Invoice, Payment.
- If two out of three events occur before rate change → Old rate applies.
- If two out of three events occur after rate change → New rate applies.
Special Rule for Payment
If payment is credited in bank after 4 working days of the rate change, then the bank credit date will be considered, not the date of entry in books.
Illustrations
1. Supply before rate change (12% → 18% w.e.f. 01.10.2025)
-
- Supply: 28.09.2025
- Invoice: 05.10.2025
- Payment: 07.10.2025
Both invoice & payment after change → TOS = earlier of invoice/payment (05.10.2025) → 18% applies.
2. Supply after rate change
-
- Supply: 02.10.2025
- Invoice: 29.09.2025
- Payment: 03.10.2025
Supply after, invoice before, payment after → TOS = payment date (03.10.2025) → 18% applies.
3. Supply before rate change
-
- Supply: 28.09.2025
- Invoice: 29.09.2025
- Payment: 05.10.2025
Supply before, invoice before, payment after → TOS = invoice date (29.09.2025) → 12% applies.
Part A: Supply made Before change in rate
| Case | Invoice Date | Payment Date | Supply Date | Time of Supply | GST Rate Applicable |
| (a)(i) | After change | After change | Before change | Earlier of Invoice/Payment | New Rate |
| (a)(ii) | Before change | After change | Before change | Invoice Date | Old Rate |
| (a)(iii) | After change | Before change | Before change | Payment Date | Old Rate |
Part B: Supply made After change in rate
| Case | Invoice Date | Payment Date | Supply Date | Time of Supply | GST Rate Applicable |
| (b)(i) | Before change | After change | After change | Payment Date | New Rate |
| (b)(ii) | Before change | Before change | After change | Earlier of Invoice/Payment | Old Rate |
| (b)(iii) | After change | Before change | After change | Invoice Date | New Rate |
♦ Special Rule – “Date of Payment”
If payment is credited to supplier’s bank account more than 4 working days after rate change,
then the date of credit in bank will be considered as payment date (not entry in books).
Conclusion
Section 14 acts as a bridging provision between old and new GST rates & provides a special mechanism to determine the applicable GST rate when there is a change in tax rates. By focusing on the timing of three key events – supply, invoice, and payment – the law ensures that there is clarity and uniformity in applying the old or new rate. This prevents disputes on rate applicability and ensures a uniform method of transition whenever GST rates are revised.
The golden principle is simple:
- If two out of three events occur before the change → Old rate applies.
- If two out of three events occur after the change → New rate applies.
This provision minimizes disputes, provides certainty to taxpayers, and facilitates a smooth transition whenever GST rates are revised. Proper attention to these rules is essential for correct tax compliance and avoiding future litigation.
*****
Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. The document is made with utmost professional caution but in no manner guarantees the content for use by any person. It is suggested to go through original statute / notification / circular / pronouncements before relying on the matter given. The document is meant for general guidance and no responsibility for loss arising to any person acting or refraining from acting as a result of any material contained in this document will be accepted by us. Professional advice recommended to be sought before any action or refrainment
Author Bio
Thanx for explaining in simple manner.
What will be the time of supply for credit notes issued after change in rate for Invoices raised and payment received before change in rates.