In order to calculate and discharge tax liability it is important to know the date when the tax liability arises i.e. the date on which the charging event has occurred. In GST Act, it is known as Time of Supply. GST Act has provided separate provisions to determine the time of supply of goods and time of supply of services.
Once the time of supply is determined, the rate of GST and the amount GST payable is calculated at that point of time and such liability is to be discharged by making payment of GST within the time specified.
1. TIME OF SUPPLY OF GOODS
The liability to pay tax on goods shall arise at the time of supply of goods under following circumstances:
i. Supply of goods, where supplier is liable to pay tax under normal situation i.e forward charge
Earliest of the following dates:
- Date of issue of invoice by the supplier. If the invoice is not issued, then the last date on which the supplier is legally bound to issue the invoice with respect to the supply
- Date on which the supplier receives the payment (Not Relevant for advances received for supply of goods)
Note:
a. The last date for issuance of invoice shall be determined in the following manner-
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- Where supply involves movement of goods: Before or at the time of removal of goods for supply to the recipient
- Where supply does not involves movement of goods: Before or at the time of delivery of goods or making the goods available to the recipient.
b. Date of receipt of payment refers to: Earlier of
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- Date on which the payment is recorded in books of account of the entity or
- Date on which the payment is credited to the entity’s bank account.
ii. Time of Supply of goods where tax is levied on reverse charge basis
Earliest of the following dates: •
- Date of receipt of goods
- Date on which the payment is entered in the books of accounts of the recipient or the date on which the payment is debited in his bank account, whichever is earlier
- Date immediately following 30 days from the date of issue of invoice or any other legal document in lieu of invoice by the supplier
However, if it is not possible to determine the time of supply in aforesaid manner, then the time of supply is the date of entry of the transaction in the books of accounts of the recipient of supply.
iii. Time of Supply in case of Vouchers
| Situation | Time of Supply |
| If the supply is identifiable at the point at which voucher is identified | Date of issuance of the voucher |
| In all other cases i.e the supply is not identifiable at the point at which voucher is identified | Date of redemption of voucher |
iv. Residuary Provision
In case it is not possible to determine the time of supply under aforesaid provisions, the time of supply is:
- Due date of filing of return, in case where periodical return has to be filed
- Date of payment of tax in all other cases
v. Time of supply in relation to an addition in the value of supply by way of interest, late fees or penalty
Time of supply related 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 supplier receives such addition in value.
For example, a supplier receives consideration in the month of September instead of due date of July and for such delay he is eligible to receive an interest amount of Rs. 1000/- and the said amount is received on 15.12.22. The time of supply of such amount (Rs. 1000/-) will be 15.12.22 i.e. the date on which it is received by the supplier and tax liability on this is to be discharged by 20.01.23.
2.TIME OF SUPPLY OF SERVICES
The liability to pay tax on services shall arise at the time of supply of services under following circumstances:
i. Time of Supply of services, where supplier is liable to pay tax under normal situation i.e forward charge
Earliest of the following dates:
- If the invoice is issued within the legally prescribed period under section 31(2) of the CGST Act:- Date of issue of invoice by the supplier or the date of receipt of payment, whichever is earlier
- If the invoice is not issued within the legally prescribed period under section 31(2) of the CGST Act:- Date of completion of provision of service or the date of receipt of payment, whichever is earlier
- In case the aforesaid two provisions do not apply: Date on which the recipient shows the receipt of service in his books of account
Note: Time Limit for issuance of invoice for supply of services:
| Situation | Time Limit for issuance of Invoice u/s 31(2) |
| In case of supply of services in a normal situation | The invoice shall be issued within a period of thirty days from the date of the supply of service. (45 days in case of insurance companies/banking companies/financial institutions including NBFCs) |
| In case of an insurer/banking company / financial institution, including a non-banking financial company/ Telecom operator, or any other class of supplier of services as may be notified by the Government making taxable supplies of services between distinct persons as specified in Section 25 | The Invoice may be issued before or at the time recording the same in books of account or before the expiry of the quarter during which the supply was made. |
ii. Time of Supply of Services which are taxable on reverse charge basis
Earliest of the following dates:
- 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
- Date immediately following 60 days from the date of issue of invoice or any other legal document in lieu of invoice by the supplier
However, if it is not possible to determine the time of supply in aforesaid manner, then the time of supply is the date of entry of the transaction in the books of accounts of the recipient of supply.
iii. Time of Supply of services in case of vouchers
| Situation | Time of Supply |
| If the supply is identifiable at the point at which voucher is identified | Date of issuance of the voucher |
| In all other cases i.e the supply is not identifiable at the point at which voucher is identified | Date of redemption of voucher |
iv. Residuary Provisions
In case it is not possible to determine the time of supply under aforesaid provisions, the time of supply is:
- Due date of filing of return, in case where periodical return has to be filed
- Date of payment of tax in all other cases
3. TIME OF SUPPLY WHERE THERE IS CHANGE IN RATE OF TAX IN RESPECT OF 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
| Invoice Issued | Payment Received | Time of Supply |
| Before change in rate | After change in rate | Date of Invoice |
| After Change in Rate | After change in rate | Date of invoice or Date of Payment, whichever is earlier |
| After change in rate | After change in rate | Date of Payment |
In case the goods or services or both have been supplied after the change in rate of tax
| Invoice Issued | Payment Received | Time of Supply |
| Before change in rate | After change in rate | Date of Payment |
| Before Change in Rate | Before change in rate | Date of invoice or Date of Payment, whichever is earlier |
| After change in rate | Before change in rate | Date of Invoice |
Date of receipt of payment in case of change in rate of tax
Normally the date of receipt of payment is the date of credit in the bank account of the recipient of payment or the date on which the payment is entered into his books of account, whichever is earlier.
However, in cases of change in rate of tax, the date of receipt of payment is the date of credit in the bank account if such credit is after four working days from the date of change in rate of tax.
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