Time of Supply in GST

Time of Supply 
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 occured. In GST law, it is known as Time of Supply. The GST law has provided separate provisions to determine the time of supply of goods and time of supply of services. Section 12, 13 & 14 of the Central GST Act, 2017 (CGST Act) deals with the provisions related to time of supply and by virtue of Section 20 of the Integrated GST Act, 2017 (IGST Act) these provisions are also applicable for the IGST Act. Point of time when supplier receives the payment or date of receipt of payment. The phrase “the date on which supplier receives the payment” or “the date of receipt of payment” means the date on which payment is entered in his books of accounts or the date on which the payment is credited to his bank account, whichever is earlier.
Time of issue of invoice for supply

 As per section 31 of the CGST Act, an invoice for supply of goods needs to be issued before or at the time of removal of goods for supply to the recipient, where the supply involves movement of goods. However, in other cases, an invoice needs to be issued before or at the time of delivery of goods or while making goods available to the recipient. Similarly an invoice for supply of services needs to be issued before or after the provision of service but not later than thirty days from the date of provision of service.


 Time of supply of goods (Default Rule)
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.

Earliest of the following dates:

• Date of issue of invoice by the supplier (If the invoice is issued within the legally prescribed period under section 31(2) of the CGST Act) or the date of receipt of payment, whichever is earlier 
• Date of provision of service (If the invoice is not issued within the legally prescribed period under section 31(2) of the CGST Act) or the date of receipt of payment, whichever is earlier
• Date on which the recipient shows the receipt of service in his books of account, in case the aforesaid two provisions do not apply 

The supply of goods or services shall be deemed to have been made to the extent it is covered by the invoice or by the payment, as the case may be. For example, Firm ‘A’ receives an advance of Rs. 2500/- on 29.07.17 for goods worth Rs. 10000/- to be supplied in the month of September, then it is deemed that firm ‘A’ has made a supply of Rs. 2500/- on 29.07.17 and tax liability on Rs. 2500/- is to be discharged by 20.08.17.
Although tax is payable on any advance received for a supply of goods or services, however for the convenience of trade, it is provided that if a supplier of taxable goods or services receives an amount upto Rs. 1000/- in excess of the amount indicated on the tax invoice, then the supplier has an option to take the date of issue of invoice in respect of such supply as the time of supply. For example, if a supplier has received an amount of Rs. 1500/- against an invoice of Rs.1100/- on 25.07.17 and the date of invoice of next supply to the said recipient is 14.08.17, then he has an option to treat the time of supply w.r.t Rs. 400/- either as 25.07.17 or 14.08.17


Time of supply of goods when tax is to be paid 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.

Time of supply of services when tax is to be paid 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.
Time of supply of services in case of supply by Associated Enterprises located outside India
In this case, the time of supply is the date of entry in the books of account of the recipient or the date of payment, whichever is earlier.