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 Model GST Law provides separate time of supply for goods and services.
As per Section 12 of the Model GST Law provides for time of supply of goods. The time of supply of goods shall be the earliest of the following namely:
1. The date on which the goods are removed by the supplier, where the supply of goods require removal; or
2. The date on which the goods are made available where the supply does not require removal; or
3. The date on which the supplier issues invoices with respect to the supply where the above two situations do not apply; or
4. The date on which the recipient shows the receipt of the goods in his books of accounts.
The time of supply of continuous supply of goods is:
1. Where successive statements of accounts or successive payments are involved, the date of expiry of the period to which such successive statement of accounts or successive payments relate.
2. Where there are no successive statements of accounts or successive payments involved, the date of issue of the invoice or the date of receipt of payment whichever is earlier.
In case of supply on approval basis, the time of supply shall be the time at which it is known whether a supply will take place or six months from the date of supply, whichever is earlier.
Where it is not possible to determine the time of supply in terms of sub-section 2,3,4, or 6 of Section 12 or that of Section 13 of Model GST Law, there is a residual entry in Section 12(7) as well as section 13(7) which states that if periodical return has to be filed, then the due date of filing of such periodical returns shall be the time of supply. In other cases, it will be the date of on which the CGST / SGST / IGST is paid.
Unlike goods, in the case of services, the time of supply is determined by the fact whether the invoice for supply of services has been issued within the prescribed period or beyond such prescribed period.
The time of supply of service when invoice is not issue d within prescribed period. The time of supply of service in such cases shall be the earliest of the following:-
1. Date of completion of the provision of service; or
2. The date of receipt of payment.
It is the earliest of the date on which the payment entered in the books of accounts of the supplier or the date on which the payment is credited to his bank account.
For example: Invoice is not issued and date of payment or date of completion of provision of service are also not ascertainable in such a case the time of supply shall be the date on which the recipient shows the receipt of services in his books of accounts.
Let us another example: Suppose part advance payment is made or invoice issued is for a part payment, the time of supply will not cover as full supply. The supply shall be deemed to have been made to the extent it is covered by the invoice or the part payment.
The time of supply will be the earliest of the following dates:-
1. Date of receipt of services
2. Date on which payment is made
3. Date of receipt of invoice
4. Date of debit in the books of accounts by supplier.
The time of supply shall be the due date of payment. If ascertainable from the contract. If not ascertainable, it will be earliest of date of receipt of payment or the date of issue of invoice or completion of event where payment is linked to completion of event.
Suppose thee was increase in tax rate from 18% to 20% w.e.f. 01.07.2017. The tax rate applicable when services provided and invoice issued before change in rate in April, 2017, but payment received after change in rate in July, 2017. The old rate of 18% shall be applicable as services are provided prior to 01.07.2017.