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Time of Supply

Time of Supply

In order to calculate and discharge the 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 law, it is known as Time of Supply. GST law has provided separate provisions to determine the time of supply of goods and time of supply of services. Sections 12, 13 & 14 of the CGST Act, 2017, deals with the provisions related to time of supply and section 20 of the IGST Act, 2017,  are applicable to inter-State supplies leviable to Integrated tax.

S. No.

Event

Due Date

1

Point of time when supplier receives the payment

The Date on Which payment is entered in the books of account. Or
The Amount credited in the bank account of supplier.
whichever is earlier

2

Time of issue of invoice of supply of goods

Before or at the time of removal of goods for supply to the recipient, in case of movement of goods. Or
Before or at the time of while making goods available to the recipient, in case of no movement of goods.

3

Time of issue of invoice of supply of services

Invoice should be issued within 30 days from the date of supply of service.
45 days in case if supplier is insurance company, banking company, financial institution or a non-banking financial institution.

4

Time of Supply of goods

Earlier of the following:-
Date on which invoice is issued by the supplier (as explained in point no. 2) Or
Date on which payment ids received (as explained in point no. 1)

5

Time of Supply of Services

Case No:1:- if invoice is issued within the prescribed time limit.
Earlier of the follwing:-

  1. The date of issue of invoice by the supplier. Or
  2. The date of receipt of payment.

Case No.2:- if invoice is not issued within the prescribed time.
Earlier of the following:-

  1. Date of provision of service. Or
  2. Date of receipt of payment

Case No.3:- Where above two provision does not apply.
Date on which the recipient shows the receipt of service in his books of accounts.

6

Time of supply of goods under reverse charge

Earlier of the following:

  1. Date of receipt of goods.
  2. Date on which payment is entered in the books of accounts or the payment is debited in his account whichever is earlier
  3. The date immediately following 30 days from the date of issue of invoice of 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.

7

Time of supply of services under reverse charge

Earlier of the following:-
1.) Date of payment entered in the books of accounts of the recipient or the date on which payment is debited in his bank account, whichever is earlier.
2.)  Date immediately following 60 days from the date the supplier issues the invoice.
However, if it is not possible to determine the time of supply in the above manner, then the time of supply is the date of entry in the books of accounts of the recipient of supply.

8

Residue Method

If the time of supply of goods or services cannot be determined using any of the above methods, then this method applies.

  1. The due date of filing GST return, if the return has to be filed. Or
  2. The date of payment of tax, in all other cases.

9

Optional Time of Supply

If amount up to Rs. 1,000 in excess of invoice amount is received then the supplier may take the time of supply is the date of invoice issued for such excess or advance received.

Note:-Time of Supply for all class of taxpayers (suppliers of goods only) to be at the time of issue of invoice
 No GST on advance receipts (Amendment vide Notification no. 66/2017- Central Tax dated 15 November, 2017,)
This exemption will not apply to advances received

  1. towards supply of services and
  2. to a person under composition scheme.

Example No. 1:
Determine point of time when supplier receives the payment:-

  1. Payment is entered in the books of account is:- 15th  Jan 2018.
  2. Amount credited in the bank account of supplier is:- 18th  Jan 2018.

Ans. 15th Jan 2018.

Example No. 2:
Determine time of Supply of goods:-

  1. Date of invoce:- 10th  Feb. 2018
  2. Entry of payment of books of accounts:- 12th  Feb. 2018
  3. Amount credited in the books of accounts:- 13th  Feb. 2018

Ans. 10th Feb. 2018
Example No.3:
Determine time of supply of service:-

  1. Date of issue of invoice is: 4th  Feb. 2018
  2. Date of receipt of payment is: 7th  Feb. 2018

Ans. 4 Feb, 2018 will be the date of supply of service because invoice has been issued within prescribed time limit i.e. 30 days.
Example No.4:
Mr. A, a manufacturer, sold goods to Mr. B, wholesaler, and issued invoice for the sale on 01st August 2017. Now, determine the time of supply of goods for the following cases:

  1.  Mr. A removes the goods for delivery to Mr. B on 16th August 2017.
  2. Mr. B collects the goods from premises of Mr. A on 10th August 2017.
  3. Mr. B made full payment on 26th July 2017.

Answers:-

  1. 1st August 2017 is the time of supply of goods

      i.e. Earlier of the following:
      Date of Invoice – 1st August 2017 or
      Date on which invoice is required to be issued – 16th August 2017.

 

  1. 1st August 2017 is the time of supply of goods

i.e. Earlier of the following:
Date of Invoice – 1st August 2017 or
Date on which goods is delivered – 10th August 2017.

  1. 26th July 2017 is the time of supply of goods

i.e. Earlier of the following:
– Date of Invoice – 1st August 2017 or
– Date of Payment – 26th July 2017.

Example No.5:-
ABC Consultancy services issued invoice for services rendered to Mr. P on 5th August 2017. Determine the time of supply in following cases:

  1. The provisions of services were completed on 1st July 2017.
  2.  The provisions of services were completed on 15th July 2017.
  3. P made the payment on 3rd August 2017, where provisions of services were remaining to be completed.
  4. P made the payment on 15th August 2017, where provisions of services were remaining to be completed.

Answers:

  • 1st July 2017 will be the time of supply of services as invoice is not issued within the time frame of 30 days.
  • 5th August 2017 will be the time of supply of services as invoice is issued within the time frame.
  • 3rd August 2017 will be the time of supply of services as payment received before invoice date.
  • 5th August 2017 will be the time of supply of services as invoice is issued before the completion of provisions of services.