Time of Supply of Services
I. If the taxable person is the Supplier of Services
Time of supply of service shall be earliest of the following dates:
1. If tax invoice is issued within the prescribed period (normally 30 days from the date of supply of service), date of issue of tax invoice or date of receipt of payment, whichever is earlier
2. If tax invoice is not issued within the prescribed period (normally 30 days from the date of supply of service), date of provision of service or date of receipt of payment, whichever is earlier
3. If above rules can’t determine the time of supply of service, then date on which recipient shows the receipt of service in his books of accounts.
Some Clarifications
1. If the payment received by the supplier of taxable supply, is more than the value of supplies indicated on tax invoice, then the time of supply for such excess amount over and above the value indicated in tax invoice, shall be determined using the above mentioned rules.
Example: Suppose Supplier Mr. A issues a tax invoice to Mr. B on 25.08.2017 for supplying of taxable services for Rs.10,000. Mr. B makes payment of Rs.13,000 on 13.09.2017. In respect of Excess amount of Rs.3000, Mr. A issues an invoice on 20.09.2017
In this case, time of supply for excess amount of Rs.3,000 would be determined according to the above rule, i.e, earlier of date of invoice or actual payment received. In this example, it would be date of payment received, i.e, 13.09.2017
2. However, if the payment received by the supplier, is upto Rs.1000 more than the value indicated in the tax invoice, then supplier will have option to choose the time of supply for that excess amount over and above the value indicated in the tax invoice, as the date of issue of invoice with respect to such excess amount.
Example: Suppose Supplier Mr. A issues a tax invoice to Mr. B on 25.08.2017 for supplying of taxable services for Rs.10,000. Mr. B makes payment of Rs.10,700 on 13.09.2017. In respect of Excess amount of Rs.700, Mr. A issues an invoice on 20.09.2017.
In this case, time of supply for excess amount of Rs.700, normally, would be the date of payment, i.e, 13.09.2017. However, as this amount is upto Rs1000, Supplier has an option to choose the time of supply for this excess amount as the date of issue of invoice in respect of such excess amount, i.e, 20.09.2017.
3. If for a single supply of taxable service, supplier issues more than one invoice or recipient makes more than one payment, then date of each invoice or payment, as the case may be, will be checked according to the above rule and it will be assumed that supply to the extent of that value (as mentioned in the invoice or as covered by the partial payment) has been made.
Example 1: Suppose for a single supply of service worth Rs.10,000, Supplier Mr. A issues 4 different invoice of different dates of Rs.2500 each in the month of Oct 2017, to recipient Mr.B who makes a single payment of Rs.10,000 in Nov 2017.
In this case, each invoice would be treated as an invoice of a separate supply and time of that separate supply will be determined using the above rules, that is earlier of date of issue of invoice or date of payment received. In this case, it would be date of invoice for all the four invoices.
Example 2: Suppose for a single supply of taxable services worth Rs.10,000, Supplier Mr. A issues 4 different invoice of different dates of Rs.2500 each, two invoice in Oct 2017 and remaining two invoices after 15th Nov 2017, to recipient Mr.B who makes a single payment of Rs.10,000 on 10th Nov 2017.
In this case, each invoice would be treated as an invoice of a separate supply and time of that separate supply will be determined using the above rules, that is earlier of date of issue of invoice or date of payment received. In this case, it would be date of invoice for the first 2 invoices and date of payment received for the last 2 invoices
Example 3: Suppose for a single supply of taxable service worth Rs.10,000, Supplier Mr. A issues a tax invoice to Mr. B on 25th Oct 2017 and Mr B makes the payment of Rs. 10,000 in four installments, say in Nov 2017.
In this case, each installment payment would be treated as a payment of a separate supply and time of that separate supply will be determined using the above rules, that is earlier of date of issue of invoice or date of payment received. In this case, it would be date of invoice for all the four installment payments.
Example 4: Suppose for a single supply of taxable service worth Rs.10,000, Supplier Mr. A issues a tax invoice to Mr. B on 25th Oct 2017 and Mr B makes the payment of Rs. 10,000 in four installments, say two installments before the date of invoice and remaining two installments in Nov 2017.
In this case, each installment payment would be treated as a payment of a separate supply and time of that separate supply will be determined using the above rules, that is earlier of date of issue of invoice or date of payment received. In this case, it would be date of payment for the first two installments made before the date of invoice and date of invoice for the last two installments which were made in Nov 2017
5. Date of receipt of payment will be the date on which payment from recipient is entered into the books of accounts of supplier or the date on which amount is credited into the bank account of the supplier, whichever is earlier
Suppose, Recipient of services makes the payment in Cash on 29th Oct 2017 and supplier makes the entry for payment received on 3rd Nov, 2017, then as per the plain reading of section 12, it seems as if the date of payment received by the supplier is 3rd Nov not 29th Oct.
Also, in case of online payment, it may happen that amount is being debited from the recipient’s bank account, say on 31st Oct but is reflected in the supplier’s bank account, say on 1st Nov, then the date of payment received will be 1st Nov, not 31st Oct
II. If the taxable person is the Recipient of Services (on Reverse Charge Basis):
Time of supply shall be earliest of the followings:
1. Date of payment as entered into the books of accounts of the recipient or the date on which the payment is debited in the bank account of the recipient, whichever is earlier
2. The date immediately following 60 days from the date of issue of invoice or any other document issued by supplier in lieu of tax invoice
3. Effectively, it will be 61st day after the date of invoice by supplier or any other document for that matter
NOTE 1: If time of supply of goods on reverse charge is not determinable, then time of supply would be deemed to be the date on which entry in respect of such supplies of taxable service is being made in the books of accounts of recipient, i.e, date on which services are received as per books of accounts of recipient.
NOTE 2: In case supplier of service and recipient of service are associated enterprise, and supplier of service is located outside India, then the time of supply of service shall be the date of entry in the books of recipient of supply or the date of payment, whichever is earlier.
Common Provisions for Supplier as well as Recipient if liable to pay tax under Reverse Charge
1. In case of Supply of Vouchers by a Supplier, time of supply shall be:
a. The date of issue of such voucher, if the supply is identifiable at that point, OR
b. The date of redemption of voucher, in all other cases
2. If it is not possible to determine the time of supply of taxable service, then time of supply shall be:
a. Where a return is to be filed, the date on which such return is to be filed
b. In all other cases, the date on which tax is paid
3. 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
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