Time of supply under GST laws

Introduction

The concept of time of supply of goods and services have been elucidated under the GST Law. Determination of time of supply becomes essential as it helps to find the applicable rate of GST. The time of supply in case of goods have been provided under section 12 of CGST Act. The time of supply in case of services have been provided under section 13 of CGST Act. Both of these sections provide six sub-sections.

 

Time of supply in case of goods –

1. Time of supply in case of Forward Charge mechanism –

Section 12 (1) talks about introduction as to section of time of supply. Section 12 (2) of CGST Act talks about the time of supply in case of forward charge mechanism. It means this section provides for the time of supply when the supplier is liable to pay tax.

In such cases the time of supply shall be

– issue of invoice or;

– the date on which the invoice should have been issued

Now section 31 provides for the date on which the invoice should have been issued under the Act. According to section 31, in case if there is a movement of goods involved then the invoice should have been issued before removal of such goods and in other cases that means where there is no movement of a good is involved, the invoice should have been issued as on the date on which the goods have been made available for the purpose of its use to the recipient of supply.

Invoice in case of Sale on return basis –

When the goods are sent for sale on return or sale on approval basis then the invoice should be issued on date of supply of such goods or on expiry of six months from removal of such goods whichever is earlier.

Notification 66/2017

Further one important point to be taken into consideration that advance received in respect of supply of goods is not liable to be taxed at the time of received as provided under notification number 66/2017 dated 15/11/2017. Therefore, the date of receipt of payment in respect of supply of goods shall not be relevant for determining the time of supply.

2. Time of supply in case of petty advance

One more important point which is required to be considered in this section is that whenever there is receipt of advanced up to 1000, the time of supply in case of such advance shall be at the option of supplier the date of issue of invoice in respect of such supply.

3. Time of supply in case of Reverse charge mechanism

According to section 12(3), this provides for time of supply in case of reverse charge basis i.e., time of supply when the recipient of supply is liable to pay tax. Under this section, the time of supply shall be earliest of the following i.e.

– date on which the goods have been actually provided to the recipient of supply or;

– the date immediately following after 30 days from the date of issue of such invoice

– the date of making payment. However here while determining the date of making payment, the date taken into consideration shall be the date entry in the books or the date of debit to the bank account; whichever is earlier.

4. Time of supply in case of voucher

Section 12 (4) talks about time of supply in case of voucher. According to this section the time of supply in case of voucher is

– if the supply is identifiable then date of issue of such a voucher for example if the voucher of cotton king is issued then in this case the supply is identifiable hence the time of supply shall be the date of issue of such voucher of cotton King and;

– if supply is not identifiable then the time of supply shall be date of redemption of such voucher for example the voucher is of shoppers Stop then in such a case the supply is not identifiable. And the supply is going to be identified at some future date hence the time of supply shall be the date of redemption of such voucher.

Residuary Clause

Section 12(5) of CGST Act provides for residuary clause. If the time of supply could not be determined by any other clause, then the time of supply shall be defined under this residuary clause. Time of supply in case of residuary clauses is that

– the date on which periodical return is filed or;

– the date on which the return is to be filed and;

– any other case the date on which taxes can actually paid

5. Time of supply in case of additional payment

Section 12 (6) talks about time of supply in case of receipt of additional payment like interest. In such case, the time of supply shall be the date on which such interest is paid i.e., payment of such an interest is made.

6. Time of supply in case of supply of service

The time of supply in case of supply of services is defined under section 13 of CGST Act. Section 13 (1) talks about introduction. Section 13 (2) talks about time of supply in case of forward charge mechanism i.e., time of supply in case where the supplier of services is liable to pay tax.

Under this section there are two points to be considered. First, when invoice is issued within time. In such a case the time of supply shall be

– the date of issue of invoice or;

– the date of receipt of payment; whichever is earlier.

In this case the invoices are said to be issued within time if it is issued within 30 days from the date of provision of services and in case of banking business the 30 days get replaced with 45 days  Second point is when the invoice is not issued within time. In such a case the time of supply shall be

– the date of actual provision of services or;

– the date of receipt of payment; whichever is earlier.

7. Time of supply in case of reverse charge basis –

Section 13 (3) talks about a time of supply in case of reverse charge mechanism i.e., time of supply where the recipient of supply of service is liable to pay tax. In this case time of supply shall be

– the date of making payment or;

– the date immediately following after 60 days from issue of this invoice.

8. Time of supply in case of service from an associated entity

The proviso to this sub-section states that whenever there is a supply of service from the associated entity as defined under section 92A of Income Tax Act 1961, the time of supply shall be date of entry of payment in the books or date of debit of bank account; whichever is earlier.

9. Time of supply in case of voucher

Alike section 12 (4), section 13(4) also provides for time of supply in case of voucher. In this case also if the supply is identifiable then the time of supply of voucher shall be the date of issue of such voucher and if the supply is not identifiable then the time of supply shall be the date of redemption of such a voucher.

Residuary Clause

For the section 13(5) talks about residuary clause. The provisions are similar as to section 12(5).

10. Time of supply in case of additional payment –

Section 13 (6) talks about receipt time of supply in case of receipt of additional payment like interest and in this case also the time of supply shall be the date of receipt of payment.

11. Time of supply in case change in rate of tax

Section 14 is the section which talks about time of supply in case where there is a change in rate of tax. There are three important event which are to be considered while determining the time of supply in case of change in rate of tax. The events are supply of goods or service, issue of invoice and receipt of payment.

12. The time of supply where the goods or services are provided before change in rate

Clause (a) of section 14 provides that in case, goods or services or both have been supplied before the change in rate of tax and payment is also received before change in rate of tax but invoice has been issued after change in rate of tax then the supply shall be date of receipt of payment.

Further, in case goods or services or both have been supplied before the change in rate of tax but issuance of invoice and receipt of payment is done after the change in rate of tax then the time of supply shall be the date earlier of two i.e., date of receipt of payment or date of issue of invoice.

Lastly, in case goods or services or both have been supplied before the change in rate of tax and the invoice has also been issued before change in rate of tax but the payment is received after change in rate of tax then the time of supply shall be the date of issue of invoice.

13. The time of supply where the goods or services are provided after change in rate

Clause b of section 14 provides that in case, goods or services or both have been supplied after the change in rate of tax and payment is also received after change in rate of tax but invoice has been issued prior to change in rate of tax then the supply shall be date of receipt of payment.

Further, in case goods or services or both have been supplied after the change in rate of tax but issuance of invoice and receipt of payment is done before change in rate of tax then the time of supply shall be the date earlier of two i.e., date of receipt of payment or date of issue of invoice.

Lastly, in case goods or services or both have been supplied after the change in rate of tax and the invoice has also been issued after change in rate of tax but the payment is received before change in rate of tax the time of supply shall be the date of issue of invoice.

Here the logic is to see where the maximum event faults that is before changing rate or after changing the rate and the time of supply shall be accordingly determined.

Conclusion

The provision of time of supply are integral part of GST Law. It helps us to determine the rate of tax applicable.