The chapter IV of the CGST Act determines the time of supply of goods or supply of services. Tax Liability arises from the date of time of supply. Time of Supply determines the point of time:
1. the time when the liability to pay tax arises;
2. the rate of tax applicable with reference to such point of time and
3. Due date for payment of tax is according to point of time.
For example if point of time is 30-11-2019 the due date for payment of tax is 20-12-2019 and if point of time is 01-12-2019, the due date for payment of tax is 20-01-2020.
Index for this Article:
A. Section 12 – Time of Supply of Goods
B. Section 13 – Time of Supply of Services
C. Section 14 – Time of Supply in case change in Rate of tax
A. Section 12 – Time of Supply of Goods
Section 12 (2) – Time of Supply of Goods
Time of Supply of Goods is the earlier of the following dates –
(a) the date of issue of invoice by the supplier or the last date on which he is required, under section 31, to issue the invoice with respect to the supply; or
(b) the date on which the supplier receives the payment with respect to the supply With effect from 15-11-2017 the Government vide notification no.66/2017 – Central Tax has dispensed with for payment of tax on advance receipts for supply of goods by the registered person who did not opt for the composition levy under section 10 of the Act. He shall pay the central tax on the outward supply of goods at the time of supply as specified in clause (a) of sub-section (2) of section 12.
“Tax on Advance Receipts for supply of services is still applicable.”
For example for the above provisions:
| 04-04-2019 | Order received for supply of 50 uniforms worth Rs.100000.00 |
| 04-04-2019 | Advance Received Rs.20000 |
| 14-05-2019 | 50 Uniforms supplied |
| 14-05-2019 | Invoice issued for Rs.100000.00 |
| 10-06-2019 | Balance Payment Rs.80000.00 received |
Time of supply of goods is the date of issue of invoice i.e. 14-05-2019 for the above transaction.
Payment received is not considered for the purpose of Time of Supply of goods according to Notification No.66/2017.
Section 12 (3) – Supply of goods on which tax is paid or liable to paid on Reverse Charge basis
Time of Supply is the earlier of the following dates –
(a) the date of the receipt of goods; or
(b) the 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; or
(c) the date immediately following thirty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the time of supply shall be the date of entry in the books of account of the recipient of supply.
Example –
| (a) | Date of Receipt of Goods | 10-05-2019 |
| (b) | Date of Payment | 04-06-2019 |
| (c) | Date of issue of invoice by the Supplier | 09-05-2019 |
| (d) | The date immediately following thirty days from the date of issue of invoice (09-05-2019) | 08-06-2019 |
The time of Supply will be 10-05-2019 being the earlier date out of dates for (a), (b) and (d)
Section 12 (4) – Time of Supply for Supply of Vouchers
(a) the date of issue of voucher, if the supply is identifiable at that point; or
(b) the date of redemption of voucher, in all other cases.
Example – An Electronic Company provides 100 vouchers of [for sec.12 (4)(a)] Rs.5000 each to the Maruti Company for use in purchase of Air Conditioner of particular model from any showroom of the Electronic Company. In this transaction the Supply is identifiable i.e. for purchase of air conditioner. Time of Supply shall be the date when vouchers are issued to the Maruti Company by the Electronic Company.
Example – The Big Bazar issues vouchers of Rs.2000 each to the [for sec.12 (4)(b)] Maruti Company during Diwali Festival for use in purchase from any Big Bazar of India. In this case the Supply is not identifiable. Time of Supply shall be the date when vouchers will be redeemed.
Section 12 (5) – Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4), 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; or
(b) in any other case, be the date on which the tax is paid.
Section 12 (6) – Time of Supply for Value Addition interest etc.
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.
For example EMI was received late by the Car Dealer from his customer. Late Fee and interest were received from the customer on 30-09-2019. Time of Supply for late fee and interest is 30-09-2019.
B. Section 13 – Time of Supply of Services
Section 13 (2) – Time of Supply of Services
The time of supply of services shall be the earlier of the following dates, namely:—
(a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under section 31 or the date of receipt of payment, whichever is earlier; or
(b) the date of provision of service, if the invoice is not issued within the period prescribed under section 31 or the date of receipt of payment, whichever is earlier; or
(c) the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not apply:
Explanation.—For the purposes of clauses (a) and (b)—
(i) the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment;
(ii) “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.
According to Rule 47 invoice shall be issued within a period of 30 thirty days from the date of the supply of services.
Examples –
1. Example for Section 13 (2)(a) wherein Tax Invoice issued within prescribed time.
| S.No. | Date | Particulars | Amount |
| 1 | 14-04-19 | Work Order Received | for Rs.10 lakh |
| 2 | 15-04-19 | Advance Received | Rs. 1 lakh |
| 3 | 30-04-19 | Advance Received | Rs. 2 lakh |
| 4 | 31-05-19 | Advance Received | Rs. 4 lakh |
| 5 | 15-06-19 | Work Completed | |
| 6 | 20-06-19 | Invoice issued | for Rs. 10 lakh |
| 7 | 30-06-19 | Balance Payment Received | Rs. 2 lakh |
| 8 | 30-09-19 | Final Payment Received | Rs. 1 lakh |
|
Time of Supply |
|||
| S.No. | Date of Issue of Invoice | Date of Receipt of Payment | Time of Supply is early date between 2 and 3 columns |
| 1 | 2 | 3 | 4 |
| 1 | 20-06-19 | 15-04-19 | 15-04-19 |
| 2 | 20-06-19 | 30-04-19 | 30-04-19 |
| 3 | 20-06-19 | 31-05-19 | 31-05-19 |
| 4 | 20-06-19 | 30-06-19 | 20-06-19 |
| 5 | 20-06-19 | 30-09-19 | 20-06-19 |
2. Example for Section 13 (2)(b) wherein Tax Invoice is not issued within prescribed time.
| S.No. | Date | Particulars | Amount |
| 1 | 14-04-19 | Work Order Received | for Rs.10 lakh |
| 2 | 15-04-19 | Advance Received | Rs. 1 lakh |
| 3 | 30-04-19 | Advance Received | Rs. 2 lakh |
| 4 | 31-05-19 | Advance Received | Rs. 4 lakh |
| 5 | 15-06-19 | Work Completed | |
| 6 | 20-09-19 | Invoice issued | for Rs. 10 lakh |
| 7 | 30-06-19 | Balance Payment Received | Rs. 2 lakh |
| 8 | 30-09-19 | Final Payment Received | Rs. 1 lakh |
|
Time of Supply |
|||
| S.No. | Date of provision of service | Date of Receipt of Payment | Time of Supply is early date between 2 and 3 columns |
| 1 | 2 | 3 | 4 |
| 1 | 15-06-19 | 15-04-19 | 15-04-19 |
| 2 | 15-06-19 | 30-04-19 | 30-04-19 |
| 3 | 15-06-19 | 31-05-19 | 31-05-19 |
| 4 | 15-06-19 | 30-06-19 | 15-06-19 |
| 5 | 15-06-19 | 30-09-19 | 15-06-19 |
Section 13 (3) – Supply of services on which tax is paid or liable to paid on Reverse Charge basis
The time of supply shall be the earlier of the following dates, namely:—
(a) the 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; or
(b) the date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b), the time of supply shall be the date of entry in the books of account of the recipient of supply:
Provided further that in case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment, whichever is earlier.
Section 13 (4) –Time of Supply for Supply of Vouchers
(a) the date of issue of voucher, if the supply is identifiable at that point; or
(b) the date of redemption of voucher, in all other cases.
Section 13 (5) – Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4), 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; or
(b) in any other case, be the date on which the tax is paid.
Section 13 (6) –Time of Supply for Value Addition interest etc.
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.
Section 14 – Time of Supply in case change in Rate of tax
In this section two occasions have been discussed separately. One is, Supply has been made before change in rate of tax and Other is, Supply has been made after change in rate of tax.
Three dates are involved in one transaction of Supply as under:
1. Date of Supply
2. Date of Issue of Invoice
3. Date of Payment Received.
The date of supply will be either before change in rate of tax or after change in rate of tax.
Set Formula is that in which period two or more dates will be stood either before change in rate of tax or after change in rate of tax, Time of Supply will be the date in the period where majority dates are available.
The example will be helpful to understand the formula.
| Supply made before Change in Rate of Tax-Sec.14 (a) | ||||
| S.No. | Supply Date | Date of Invoice issued | Date of Payment of Received | Time of Supply |
| ( i ) | Before change in rate of tax | After change in rate of tax | After change in rate of tax | After change in rate tax. The date will be early date between date of issue of invoice and date of payment received |
| ( ii ) | Before change in rate of tax | Before change in rate of tax | After change in rate of tax | Before change in rate tax. The date will be the date of invoice issued. |
| ( iii ) | Before change in rate of tax | After change in rate of tax | Before change in rate of tax | Before change in rate tax. The date will be the date of payment received. |
|
Supply made after Change in Rate of Tax-Sec.14(b) |
||||
| S.No. | Supply Date | Date of Invoice issued | Date of Payment of Received | Time of Supply |
| ( i ) | After change in rate of tax | Before change in rate of tax | After change in rate of tax | After change in rate tax. The date will be the date of payment received |
| ( ii ) | After change in rate of tax | Before change in rate of tax | Before change in rate of tax | Before change in rate tax. The will be early date between date of issue of invoice and date of payment received. |
| ( iii ) | After change in rate of tax | After change in rate of tax | Before change in rate of tax | After change in rate tax. The date will be the date of invoice issued. |
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.
To Understand the concept of the proviso and explanation the following Example is given.
> Date of change in rate of tax – 30-09-2019
> Four Working days after change in rate of tax are 1st , 3rd , 4th and 5th
> Payment credited in bank of account on – 07-10-2019
> Payment entered in books of account on – 30-09-2019
> According to the proviso date of receipt of payment is 07-10-2019 because payment credited in bank account after four working days.
Other Example
> Date of change in rate of tax – 30-09-2019
> Four Working days after change in rate of tax are 1st , 3rd , 4th and 5th
> Payment credited in bank of account on – 05-10-2019
> Payment entered in books of account on – 30-09-2019
> Proviso is not applicable because the payment has been credited to bank account within four working days.
> According to the explanation the date of receipt of payment is 30-09-2019 i.e. early date between date of entry in books of account and date of payment credited to the bank account.
To reach to me for any suggestions, rectifications, amendments and/or further clarifications in regard of this article my email address is gstupdate@gmail.com.
Author Bio
Sir,
So, in the work order case, as the example given above, month wise tax shall be deposited as follows:
-Gst against Rs. 3 lakhs advance (2+1) received in April shall be deposited before 20th of May, 2019.
-GST against Rs. 4 lakhs received in May shall be deposited before 20th of June,2019.
-Gst against balance 2 lakhs of June invoice shall be deposited before 20th July.
Am I right ,sir ?