Time of Supply clarifies the occasion when the liability to charge tax arises. Time of supply is not a fact to be asked by the taxable person but one that is to be admitted as the time of supply provided by the will of Law as declared in the relevant sections. Therefore, the time of supply is what is stated in the law to be the time of supply and nothing else.
Calculate your GST Payment and Input Tax Credit (ITC)
Time of supply is necessary to be understood properly as GST liability arises according to the supply of goods or rendering of services. This is most important to understand as it will make us understand when the Supply of goods or services is Taxable and at what rate.
GST = Value of supply X Rate of GST
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Arises at a particular Time and Time of Supply explains that.
There are two sections, Section 12 and Section 13, in the Act that explains the concept. Section 12 deals with the Time of supply of Goods and Section 13 deals with Time of Supply of Services.
Analysis of Section 12 and Section 13
- Every person who buys good or receives service is entitled to pay GST at the time of supply of goods or services for the taxable supply.
FAQs on Composition Scheme
- Forward Charge Mechanism is when the seller pays the tax collected to the Government. In the case of Forward Charge Mechanism, the time of supply is earlier of :
| For Goods | For Services |
| – Date of issue of invoice ( Date on which bill is made),
– Last Date on which the invoice is required to be issued, – Date on which he entered the payment in his books, or – Date on which the payment is credited to his bank account
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– Date of issue of invoice (Date on which bill is made),
– Last Date on which the invoice is required to be issued – Date on which he entered the payment in his books – Date on which the payment is credited to his bank account But if it is not possible to determine the time of supply with the above provisions. The Time of Supply will be the Date on which the recipient of service shows receipt of service in his books.
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| Last Date on which the invoice is required to be issued is Before or at the time of
– Removal of goods for supply to the recipient, where the supply involves movement – Delivery of goods or making available to the recipient, in other cases. |
Last Date on which the invoice is required to be issued is 30days (45 days in case of insurance companies/ financial institution including NBFCs ) from the date of Supply of Services.
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Check the GST calendar
If the supplier receives an amount up to Rs. 1000 in excess of the invoice amount, the time of supply for the extra amount shall be the date of issue of invoice (at the option of the supplier).
Examples-
| Date of issue of Invoice | Date of Goods Supplied | Date of Services Supplied | Date on which payment is received | Time of Supply |
| 15th January 2019 | 12th January 2019 | – | 20th January 2019 | 12th January 2019 |
| 25th January 2019 | – | 02nd January 2019 | 30th January 2019 | 02nd January 2019 |
Bill of Supply
- Reverse Charge Mechanism is when the buyer or recipient pays the tax to the Government. In the case of Reverse Charge Mechanism, the time of supply is earlier of :
| For Goods | For Services |
| – Date of receipt of goods ( Date on which bill is made),
– Date immediately after 30 days from the date of issue of an invoice by the supplier, – Date on which he entered the payment in books, or – Date on which the payment is debited from his bank account. |
– Date immediately after 60 days from the date of issue of an invoice by the supplier,
– Date on which he entered the payment in books, or – Date on which the payment is debited from his bank account.
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| If it is not possible to determine the Time of Supply by the above, the time of supply will be the date of entry in the books of account of the recipient. | If it is not possible to determine the Time of Supply by the above, the time of supply will be earlier of
– Date of entry in the books of account of the recipient – Date of payment of services ,or – Date of entry of service in the books of account of recipient of service. |
NOTE: But if the service is provided by the Associate of foreign supplier then DATE OF RECEIPT OF SERVICE in the books of accounts of the recipient or DATE OF PAYMENT whichever is earlier will be The Time of Supply of services.
FAQ on Goods Transport Agency
- Sometimes Restaurants issues Vouchers specifying Discount on another purchase within the specified period. So before deciding Time of Supply for the vouchers, we need to identify which type of Vouchers we are having. There are two types of vouchers –
- Identifiable-Voucher in which one can specify where it can be used is Identifiable voucher. Date of issue of such vouchers is Time of Supply of goods or services.Example– Voucher received from Dominos, customer can use to buy specific Burger only.
- Non Identifiable–
Those Vouchers in which one cannot specify where it can be used is Non Identifiable voucher. Date of redemption of such vouchers is Time of Supply of goods or services.
Example– Voucher received from Dominos, customer can use to get a certain percent off on next purchase.
Supply done Free Of Cost
- Where the above-mentioned provisions fail to explain Time of Supply. Then time of supply for goods or services is-
- Where a periodical return is filled- Due Date of filing of return.
- In other cases- Date of Payment of Tax.
- Sometimes we charge interest, late fee or penalty on delay in payment for goods or services, also known as additions or special charges, from the customers. Time of Supply for such Additions will be date on which supplier receives the payment of addition.
The Author of above article is Aditya Kishore, ICAI.
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