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Time of Supply : Relevance under GST to Avoid Delays / Determine Applicable Date for Change in GST Rate

Time of supply under GST refers to the point at which a transaction becomes liable to pay tax. Sections 12, 13 & 14 of the CGST Act, 2017, deal with the provisions related to time of supply. By section 20 of the IGST Act, 2017, these provisions also apply to inter-State supplies leviable to Integrated tax.



Time of Supply of Goods:

 

In case of forward charge: 

Date of issue of invoice OR last date when such invoice should have been issued, as per section 31 of the CGST act.

  • If goods involve movement: Before or at the time of removal of goods.

  • If goods don't involve movement: Before or at the time of delivery of goods.


In case of reverse charge:

  • Date of receipt of such goods OR

  • Date of making payment by the recipient to supplier OR

  • Date immediately following 30 days from the date of issue of invoice or any other document instead of.

Time of Supply of Services: 


In case of forward charge:

i) Invoice is issued within 30 days from date of provision of service {45 days in case of banking services}

Earlier of:

  • Date of issue of INVOICE

  • Date of receipt of payment.

ii) Invoice is NOT issued within 30 days from date of provision of service {45days in case of banking services}

Earlier of:

  • Date of PROVISION of service

  • Date of receipt of payment.

iii) Meaning of Date of Receipt of Payment shall be: Earlier of :

  • Date of entry of the receipt of payment in the books of Accounts of Supplier.

  • Date of Credit in his Bank Account

In case of reverse charge:

Earlier of

  • Date of making payment by the Recipient of Supply to the supplier

  • Date immediately following 60 days from the date of issue of invoice or any other document in lieu thereof.

Time of Supply of Vouchers:

 

Voucher has been defined in the CGST Act, 2017 as “an instrument where there is an obligation to accept it as consideration or part consideration for a supply of goods or services or both and where the goods or services or both to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument. “

 

A shopkeeper may issue vouchers for specific supply i.e. supply is identifiable at the time of issuance of the voucher. In trade parlance, these are known as single-purpose vouchers. For example, vouchers for pressure cookers or Television or for spas or haircuts.

 

A voucher can be a general-purpose voucher which can be used for multiple purposes. For example, a Rs. 1000/- voucher issued by Shoppers’ Stop store can be used for buying any product at any Shoppes’ Stop store. The time of supply is different in the case of single-purpose vouchers and in the case of general-purpose vouchers.

 

Time of Supply for Single Purpose Voucher:

If Supply is IDENTIFIABLE at the time of ISSUE of Voucher - Date of ISSUE of Voucher

 

Time of Supply for General Purpose Voucher:

If supply is NOT IDENTIFIABLE at time of issue of voucher - Date of REDEMPTION of Voucher.

 

Time of supply of services in case of supply by Associated Enterprises located outside India

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.


 Change in Rate of Tax in respect of supply of goods or services

If the tax rate of any goods or services changes from 18% to 12% , then it becomes important to determine which tax rate will be applicable if any supply of goods or services falls partly in the era of 18% and balance in the era of 12%. Beside table will help you understand it clearly.

Supply is completed before the change in rate of tax

Invoice issued before date of change in tax rate

Payment received before date of change in tax rate

Time of supply

Applicable rate of tax

No

No

earliest of the date of invoice or payment

New rate of tax

Yes

No

Date of issue of invoice.

Old Tax Rate

No

Yes

Date of receipt of payment

Old tax rate

Supply is completed after the change in rate of tax

Invoice issued before date of change in tax rate

Payment received before date of change in tax rate

Time of supply

Applicable rate of tax

Yes

Yes

earliest of the date of invoice or payment

Old rate of tax

Yes

No

Date of receipt of payment

New rate of tax

No

Yes

Date of issue of invoice

New rate of tax






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