Kriti Sood

The introduction of the Goods and Services Tax has been a very noteworthy step in the field of indirect tax reforms in India. GST has replaced almost entire indirect tax system which has not only impacted accounting or taxation system of a business, but almost every aspect of the existing business structure, including purchase, sales, services, exports etc. Here, one of the important aspects under GST is the point of time when a tax payer is liable to discharge its GST liability. Typically, the liability to pay tax on supply of goods and services arises under GST law at the time of supply which is to be determined in accordance with the provisions of Section 12, 13 and 14 of the Central Goods and Service Tax Act, 2017. Further, by virtue of Section 20 of the Integrated Goods and Service Tax Act, 2017, the provisions of time of supply mentioned in the CGST Act are also applicable on inter-state supplies. There are separate provisions for time of supply for goods and time of supply for services.

Time of Supply of Goods

The liability to pay tax on supply of goods arises at the time of supply determined in the following manner:

In case of goods (forward charge)

Earliest of the following dates:

  • Date of issue of invoice by the supplier or last date specified under section 31, or
  • Date on which supplier receives the payment

In case of reverse charge

Earliest of following dates:

  • Date of receipt of goods, or
  • Date of receipt of payment, whichever is earlier, or
  • 30 days from the date of issue of invoice

In case of supply of vouchers

Earliest of following dates:

  • Date of issue of voucher, if supply is identifiable, or
  • Date of redemption of voucher, in any other case

In case it is not possible to determine the time of supply as discussedabove then it shall be determined as follows:

  • Date of periodical return has to be filed, or
  • Date on which the tax is paid, whichever is earlier

However, as per Notification 66/2017-CT dated 15.11.2017, a registered person (excluding composition levy) has to pay GST on the outward supply of the goods at the time of supply as specified in section 12(2)(a) i.e. date of issue of invoice or the last date on which the invoice is to be raised as per section 31 of the Act. In other words, the tax payer is not required to pay tax on advances received towards the outward supply of goods wef 15.11.2015 and the requirement to pay tax shall arise at the time of issuance of invoice for the supply.

For example:

A machine has to be supplied at site. It is done by sourcing various components from vendors and assembling the machine at site. The details of the various events are:

17.09.2018 Purchase order with advance of Rs. 50,000/- is received for the goods worth Rs. 12 lakh and entry duly made in the seller’s books of accounts
23.10.2018 Invoice issued
05.11.2018 Balance Payment received of Rs. 11,50,000/-

As per Notification 66/2017-CT dated 15.11.2017, the tax payer  has to pay GST on the outward supply of the goods at the time of supply as specified in section 12(2)(a) i.e. date of issue of invoice or the last date on which the invoice is to be raised as per section 31 of the Act.

The time of supply in this case is 23.10.2018 ie the date of issuance of invoice.

Time of Supply of Services

The liability to pay in case of supply of services arises at the time of supply determined in the following manner:

In case of services (forward charge)

Earliest of the following dates:

  • Date of issue of invoice by the supplier or last date specified under Section 31, or
  • Date on which supplier receives the payment

Where invoice is not issued as specified in Section 31,the time of supply shall be earliest of the following dates:

  • Date of provision of service, or
  • Date of receipt of payment

In case of reverse charge

Earliest of following dates:

  • Date of receipt of services, or
  • Date of receipt of payment, whichever is earlier, or
  • 30 days from the date of issue of invoice

In case of supply of vouchers

Earliest of following dates:

  • Date of issue of voucher, if supply is identifiable, or
  • Date of redemption of voucher

In case it is not possible to determine the time of supply as discussed above then it shall be determined as follows:

  • In case where a periodical return is to be filed,  be the date on which such return is to be filed, or
  • In any other case the date on which the tax is paid

The date of receipt of payment by the supplier shall typically be the earliest of the following dates:

  • Date on which payment is entered in the books of accounts of the supplier of goods or services or both, or
  • Date on which payment is credited to the bank account of the supplier of goods or services or both

Time of supply in case of change in rate of tax for supply of goods or services or both

In case the goods or services or both have been supplied before the change in rate of tax

Where the invoice is issued and the payment is made after the change in rate of tax, time of supply shall be the earliest of the following dates:

  • Date of receipt of payment, or
  • Date of issue of invoice

Where the invoice is issued before and payment is made after the change in rate of tax, the time of supply shall be the date of issue of invoice.

Where the invoice is issued after and payment is made before the change in rate of tax, the time of supply shall be the date of receipt of payment.

In case the goods or services or both have been supplied after the change in rate of tax

Where the invoice is issued and the payment is made before the change in rate of tax, time of supply shall be the earliest of the following dates:

  • Date of receipt of payment, or
  • Date of issue of invoice

Where the invoice is issued before and payment is made after the change in rate of tax, the time of supply shall be the date of receipt of payment.

Where the invoice is issued after and payment is made before the change in rate of tax, the time of supply shall be the date of issue of invoice.

It may be noted that the time limit for the issuance of invoice as prescribed under Section 31 of the CGST Act is as under:

Where supply involves movement of goods; the invoice needs to be issued either before or at the time of removal of goods; or delivery of goods or making goods available to the recipient in any other case (Section 31(1)).

In case of continuous supply of goods; the invoice should be issued before or at the time of issuance of periodical statement/ receipt of periodical payment (Section 31(4)).

In case of goods sent for approval basis or return; the invoice should be issued before or at the time of supply or 6 months from the date of removal, whichever is earlier (Section 31(7)).

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