CHAPTER V

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 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 by virtue of
section 20 of the IGST Act, 2017, these provisions are also
applicable to inter-State supplies leviable to Integrated tax.

Point of time when supplier receives the payment or dateof 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 books
of accounts of the supplier 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, 2017 CGST
an invoice forsupply of goods needs to be issued before or at the timeof
removal of goods for supply to the recipient where thesupply involves
movement of goods. However, in other cases, invoice needs to be issued
before or at the time of delivery of goods or making available goods 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 invoice is not issued, then
  the last date on which supplier is legally bound to issue the invoice
  with respect to the supply.

• Date on which supplier receives the payment.

Section 148 of the CGST Act, 2017, confers
powers on the government (on the recommendation of the GST Council) to
notify certain classes of registered persons and the special procedures to
be followed by such persons including those with regard to registration,
furnishing of return, payment of tax and administration of such
persons. In exercise of powers conferred by this section, the government on
the recommendations of the GST Council has notified the registered persons
(who have not opted for composition levy) as the class of persons who shall
pay GST on outward supply of goods at the time of supply specified in
clause (a) of sub-section (2) of Section 12. Thus, in respect
of supply of goods by normal registered persons (other than composition
dealers), the time of supply will be the issue of invoice (or the last date
by which invoice has to be issued in terms of Section 31
Therefore, all taxpayers (except composition taxpayers) are exempted from
paying GST at the time of receipt of advance in relation to supply of
goods. The entire GST shall be payable only when the invoice is issued for
such supply of goods. The special procedure will be applicable to this
class of persons (registered persons making supplies of goods other than
composition dealers) even in situations governed by Section 14 of the
Act (change in rate). Notification no. 66/2017-Central Tax
dated 15.11.2017 may be referred to.

Time of supply of services (Default Rule)

Earliest of the following dates

• If the invoice is issued within the legally prescribed period under
  section 31(2) of the CGST Act, 2017 read with Rule 47 of
  CGST Rules, 2017 (which isthirty days from the date of
  the supply of service), then the date of issue of invoice by the supplier
  or date of receipt of payment, which ever is earlier.

• If the invoice is not issued within the legally prescribed period under
  section 31(2) of the CGST Act, 2017 then
  the date of provision of service or date of receipt of payment, whichever
  is earlier.

• Date on which recipient shows the receipt of service in his books of
  account, in a case aforesaid two provisions do not apply.

The supply of services shall 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 29.07.2017 for provision of
services 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 29.07.2017
and tax liability on Rs. 2500/- is to be discharged by 20.08.2017.

Although tax is payable on any advance received for a supply of services,
however for the convenience of trade it is provided that if a supplier of
taxable services receives an amount up to 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 time of
supply. For example, if a supplier has received an amount of Rs. 1500/-
against an invoice of Rs.1100/- on 25.07.2017 and date of invoice of next
supply to the said recipient is 14.08.2017, then he has option to treat the
time of supply w.r.t Rs. 400/- either as 25.07.2017 or 14.08.2017.

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 payment is entered in the books of accounts of the
  recipient or the date on which the payment is debited in his bank
  account, which ever 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.

Time of supply in case 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. Vouchers are commonly used for transaction in the Indian
economy. A shopkeeper may issue vouchers for specific supply i.e. supply 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
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. 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 date of issue
of voucher. However, in all other cases of supply of vouchers, time of
supply is 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 afore said
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 suppliers 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 said amount is received on 15.12.2017.
The time of supply of such amount (Rs. 1000/-) will be the 15.12.2017 i.e.
the date on which it is received by the supplier and tax liability on this
is to be discharged by 20.01.2018.

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

Where there is a change in rate of tax of supply of goods or services, time
of supply has to be determined in the following manner:-

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
No	No	Date of issue of invoice.	Old tax rate
Yes	No	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 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

However, the special procedure for payment of tax by suppliers of goods
(other than composition dealers) notified by Government vide notification
no. 66/2017-Central Tax dated 15.11.2017
under section 148 of the CGST Act 2017, will continue to
govern even in the above situation. In a nutshell, suppliers of goods
other than composition dealers will have to pay tax at the time of issue of
invoice only.

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. Further, the date of credit in the bank
account is relevant if such credit is after four working days
from the date of change in rate of tax.