CHAPTER 18

 

Time of supply
  1. Time of supply determines when tax becomes payable and what would be the rate of GST.
  2. Generally, GST is payable when supply is made or when payment is received, whichever is earlier.
  3. GST is payable when advance is received even if supply is to be made later. However, GST is not payable on ‘adjustable deposit’.
  4. GST is payable on monthly basis by 20th of the following month. Monthly return is also required to be filed on the same day.
  5. Small taxable persons have to file quarterly return and pay tax on quarterly basis.

 

Time of supply of goods (default rule)

The time of supply of goods shall be the earlier of the following dates:

  1. The date of issue of invoice by the supplier or the last date on which he is required under section 31(1) of CGST Act, to issue the invoice with respect to supply*(a) or
  2. The date on which the supplier receives the payment with respect to supply, i.e.,
  • the date on which the payment is entered in the supplier’s books of account or
  • the date on which it is credited in the bank account; whichever is earlier.

 

Exception – if advance upto ₹1000 is received, GST is not payable at that stage; payable when invoice is raised.

*(a) – supplier is required to issue tax invoice before or at the time of removal of goods.

 

 

Removal of goods 

  • Dispatch of goods for delivery by the supplier or by any person acting on behalf
  • Or collection of goods by the recipient or by any person acting on behalf.

 

Time of supply of goods under reverse charge mechanism

When the procurement of goods is made from an unregistered supplier, the recipient of the goods is responsible for the documentation and payment of GST as follows:

The time of supply shall be the earliest of:

  1. The date of receipt of goods.
  2. The date of payment as entered in the books or the date on which it is debited from the bank account; whichever is earlier.
  3. The date immediately following 30 days from the date of issue of invoice or any other document, by whatever name called by the supplier.
  4. When it is not possible to determine the time of supply under any of the above three clauses, the time of supply shall be the date of entry in the books of accounts of the recipient of the supply.

 

Time of supply in case of vouchers for goods

Voucher means an instrument where there is an obligation to accept it as consideration or part consideration for supply of goods/services and where the goods/services 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.

In case of supply of vouchers by a supplier, the time of supply shall be:

  • The date of issue of voucher if the supply is identifiable at that point or
  • The date of redemption of voucher in all other cases.

 

Time of supply for interest, late fee or penalty

The time of supply to the extent it relates 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 the supplier receives such addition in value.

 

Time of supply in other situations

When it is not possible to determine time of supply under any of the aforesaid provisions, time of supply is:

  • In a case where periodical return has to be filed , the due date on which such return is to be filed or
  • In any other case, the date on which taxes are paid.

 

Time of supply of services(default rule)

Time of supply of services shall be the earlier of the following:

  1. The date of issue of invoice by the supplier if it is issued within the prescribed period under section 13(2) of CGST Act, or
  2. The date on which the supplier receives the payment with respect to supply: the date on which the payment is entered in the supplier’s books of account or the date on which it is credited in the bank account; whichever is earlier, or
  3. The date of provision of service, if the invoice is not issued within the period prescribed, or
  4. The date on which the recipient shows the receipt of services in his books when the above clauses are not determinable.Exception – if advance upto ₹1000 is received, GST is not payable at that stage; payable when invoice is raised.

 

Time of supply of services under reverse charge mechanism

When the procurement of service is made from an unregistered supplier, the recipient of the service is responsible for the documentation and payment of GST as follow:

The time of supply shall be the earliest of:

  1. The date of payment as entered in the books of the recipient or the date on which it is debited from the bank account; whichever is earlier or
  2. The date immediately following 60 days from the date of issue of invoice or any other document, by whatever name called by the supplier.
  3. When it is not possible to determine the time of supply under any of the above clauses, the time of supply shall be the date of entry in the books of accounts of the recipient of the supply.

 

Time of supply in reverse charge when service received from Associated Enterprise outside India

Associated Enterprise has the meaning assigned to in section 92A of Income Tax Act, 1961 which has several clauses and explanations. However, the broad meaning includes an enterprise if:

  • It participates directly or indirectly or through one or more intermediaries, in the management, control or capital of the enterprise, or
  • In respect of it, one or more persons who participate, directly or indirectly or through one or more intermediaries, in the management, control or capital are the same persons who participate directly or indirectly or through one or more intermediaries, in the management, control or capital of the other enterprise.

In case of supply by associated enterprises where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment whichever is earlier.

 

Time of supply in case of supply of voucher for services

Voucher means an instrument where there is an obligation to accept it as consideration or part consideration for supply of goods/services and where the goods/services 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.

In case of supply of vouchers by a supplier, the time of supply shall be:

  • The date of issue of voucher if the supply is identifiable at that point, or
  • The date of redemption of voucher in all other cases.

 

Time of supply for interest, late fee or penalty

The time of supply to the extent it relates 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 the supplier receives such addition in value.

 

Time of supply of services in other cases

When it is not possible to determine time of supply under any of the aforesaid provisions, time of supply is:

  • In a case where periodical return has to be filed, the due date on which such return is to be filed, or
  • In any other case, the date on which taxes are paid.

 

Time of supply in case of change in rate of tax

 

Taxable service provided before change in effective rate:

  • Where the invoice is issued and payment is also received after change in rate, the time of supply shall be the earlier of the date of invoice or date of payment.
  • Where the invoice is issued prior to change but payment is received after the change, time of supply shall be date of issue of invoice.
  • Where payment is received prior to the change but invoice is issued after the change, time of supply shall be date of receipt of payment.

 

Taxable service provided after change in effective rate

  • Where payment is received after the change but invoice is issued prior to change, time of supply shall be date of receipt of payment.
  • Where invoice is issued and the payment is received before the change, time of supply shall be earlier of date of invoice or date of payment.
  • Where invoice is issued after change but payment is received before change, time of supply shall be date of issue of invoice.

Date of payment will be earlier of entry in the books of the supplier or credit in the bank account whichever is earlier.