Time of Supply of Goods and Services Provisions under GST: Detailed Analysis

Introduction: The Time of Supply (TOS) is a critical concept under the Goods and Services Tax (GST) regime in India. It determines the point in time when goods are considered supplied or services are deemed provided. Understanding TOS is essential for compliance with GST laws, as it dictates when the taxpayer is liable to pay GST. The provisions for TOS are different for goods and services, and this article delves into the detailed analysis of these provisions under the Central Goods and Services Tax (CGST) Act, 2017.

Point of Taxation Provisions

Time of supply is a relevant measure under the GST law for every transaction entered into by the supplier of goods and services. This means the point in time when goods have been deemed to be supplied or services have been deemed to be provided to determine when the taxpayer is liable to pay taxes.

Time of supply means the point in time when goods/services are considered supplied’. When the seller knows the ‘time’, it helps him identify due date for payment of taxes. CGST/SGST or IGST must be paid at the time of supply. Goods and services have a separate basis to identify their time of supply.

The time of supply fixes the point when the liability to charge GST arises. It also indicates when a supply is deemed to have been made.

The CGST Act, 2017 provides separate time of supply for goods and services.

Time of Supply in the case of Supply of Goods under forward charge

In terms of Section 12(1) of the CGST/SGST Act, the time of supply of goods shall be the earlier of the following – (Section 12(1) & 31 of CGST Act, 2017)

(i) vthe date of issue of invoice by the supplier or the last date on which he is required to issue the invoice as per Section 31of CGST Act, 2017, with respect to the supply; or

(ii) the date on which the supplier receives the payment with respect to the supply.

Time of Supply in the case of Supply of Services under forward charge

Section 13(1) of the CGST Act, 2017 provides for time of supply of services. The time of supply of services shall be the earlier of the following – (Section 13(1) & 31 of CGST Act, 2017)

(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;

(c) the date on which the recipient shows the receipt of services in his books of account, in case where the clauses do not apply.

Time of Supply in the case of Supply of Vouchers under forward charge

The time of supply of voucher (e.g. Gift Voucher, etc.) in respect of goods and services shall be;

(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.

Time of Supply in the case of Supply of other cases under forward charge

If it is not possible to determine the time of supply in the manner stated above, then as per Section 12(5) and 13(5) of the CGST Act, 2017, if periodical return has to be filed, then the due date of filing of such periodical return shall be the time of supply. In other cases, it will be the date on which the CGST/SGST/IGST is actually paid. (Section 12(5) and 13(5) of CGST Act, 2017)

Time of supply of Goods in case of tax payable under RCM

The time of supply of goods in case of tax payable under reverse charge mechanism will be the earliest of the following dates:

(a) date of receipt of goods; or

(b) date on which payment is made; or

(c) the date immediately following 30 days from the date of issue of invoice by the supplier.

(d) Where it is not possible to determine the time of supply under the above three clauses, the time of supply shall be the date of entry in the books of account of the recipient of supply.

Time of supply of Services in case of tax payable under RCM

The time of supply of service in case of tax payable under reverse charge mechanism will be the earliest of the following dates:

(a) date on which payment is made; or

(b) the date immediately following sixty days from the date of issue of invoice by the supplier.

Time of supply with regard to addition in Value

The time of supply with regard to an addition in value on account of interest, late fee or penalty on delayed consideration shall be the date on which the supplier received such additional consideration.

In cases where supply is completed prior to change in rate of tax, the time of supply will be–

(i) 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. For supply of goods payment of tax need to be made only at the time of issue of invoice; or

(ii) where the invoice has been issued prior to change in rate of tax but the payment is received after the change in rate of tax, the time of supply shall be the date of issue of invoice; or

(iii) where the payment is received before the change in rate of tax, but the invoice for the same has been issued after the change in rate of tax, the time of supply shall be the date of receipt of payment. For supply of goods payment of tax need to be made only at the time of issue of invoice.

In cases where supply is completed after change in rate of tax, the time of supply will be-

(i) 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. For supply of goods payment of tax need to be made only at the time of issue of invoice; or

(ii) where the invoice has been issued and the 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;

(iii) 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

In respect of services between the associated enterprise, the time of supply in the case of supply of services where the supplier is located outside India will be the earlier of date of entry in the books of account of the recipient of supply or the date of payment. That is, the levy under GST is attracted once such book entries are made even if no actual payment takes place or no invoice is issued.

Time of supply in respect of continuous supply of Services

The time of supply in respect of continuous supply of services will be the date by which the invoice is actually issued or is required to be issued or the date of receipt of payment, whichever is earlier.

Under GST the point of taxation ,ie., the liability to pay GST will arise at the time of supply as determined for goods and services.

Conclusion: Understanding the Time of Supply provisions under GST is crucial for compliance and accurate tax liability determination. The CGST Act, 2017, provides clear guidelines for different scenarios, ensuring that suppliers and recipients can accurately determine their tax obligations. As GST continues to evolve, staying informed about these provisions will help businesses navigate the complexities of GST compliance effectively.

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