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
Time of supply of services (Default
Rule)
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 earliar.
Time of supply in case of supply of
vouchers
A
voucher has been defined in the CGST Act 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. Vouchers are commonly used for
transaction in the Indian economy. A shopkeeper may issue vouchers for a
specific supply i.e. supply which is identifiable at the time of issuance of
voucher. In trade parlance, these are known as single purpose vouchers.
For
example, vouchers for pressure cookers or television or for spa or haircut.
Similarly a voucher can be a general purpose voucher which can be used for
multiple purposes. For example a Rs. 1000/- voucher issued by Shopper’s Stop
store can be used for buying any product or service at any Shopper’s Stop
store. The time of supply is different in case of single purpose voucher and in
the case of general purpose voucher. Time of supply in the case of single
purpose voucher i.e. case where supply is identifiable at the time of issuance
of voucher is the date of issue of voucher. However, in all other cases of
supply of vouchers, the time of supply is the date of redemption of voucher.
Time of supply of goods or services
(Residual 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.
Time of supply of goods or services related 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 15.12.17. The time of supply of such amount (Rs. 1000/-) will be
15.12.17 i.e. the date on which it is received by the supplier and tax
liability on this is to be discharged by 20.01.18.
Change in Rate of Tax in respect of
supply of goods or services
The normal time of supply rules changes if
there is a change in the rate of tax of supply of goods or services. In this
scenario, time of supply has to be determined in the following manner:
Supply is completed before the change in rate
of tax.
|
Invoice issued before the date of change in tax rate
|
Payment received before the 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 Invoices
|
old tax rate
|
|
No
|
Yes
|
Date of receipt of payment
|
Old tax rate
|
Supply is
complete after the change in tax rate
|
Invoice issued before the date of change in tax rate
|
Payment received before the 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 tax rate
|
|
No
|
Yes
|
Date of issue of invoice
|
New tax rate
|
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.
Source – from CBEC official website.
