Time of Supply (When taxpayer is liable to pay taxes)

Supply of Goods

Supply of Services

Time of supply for vouchers

When time of supply cannot be determined

Supply of Goods

Time of supply under normal charge

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

(a) The date of issuing of invoice (or the last day by which invoice should have been issued) OR

(b) The date of receipt of payment

Notes:

If the supplier receives an amount up to Rs.1,000 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). (it may be by mistake or fractional unexpexted difference in expected invoice value so benefit given to taxpayers to choose)

For (a) and (b)- The supply shall be assumed to have been made to the extent it is covered by the invoice or the payment (as the case may be).

For (b)- the date of receipt of payment shall be earlier of-

(i). The date on which he entered the payment in his books OR

(ii). The date on which the payment is credited to his bank account Example:

Illustration:

(a) Date of invoice 15th May 2021

(b) Date of receipt of payment 10th July 2021

Answer :-

Time of supply will be 15th May 2021.

Time of supply under reverse charge

Reverse charge means the liability to pay tax is by the recipient of goods/services instead of the supplier.

In case of reverse charge, the time of supply shall be the earliest of the following dates—

(a) the date of receipt of goods OR

(b) the date of payment (see notes below) OR

(d) If it is not possible to determine the time of supply under (a), (b) or (c), the time of supply shall be the date of entry in the books of account of the recipient.

Notes: For clause (b)- the date of payment shall be earlier of-

- 1. The date on which the recipient entered the payment in his books OR
  2. The date on which the payment is debited from his bank account

Illustration:

(a) Date of receipt of goods 15th May 2021

(b) Date of payment 15th July 2021

(d) Date of entry in books of receiver 18th May 2021

Answer :-

Time of supply of goods 15th May 2021
If for some reason time of supply could not be determined supply under (a), (b) or (c) then it would be 18th May 2018 i.e., date of entry

Time of supply for vouchers

In case of supply of vouchers the time of supply is-

(a) The date of issue of the voucher, if the supply can be identified at that point. OR

(b) The date of redemption of the voucher, in all other cases.

When time of supply cannot be determined

If it is not possible to determine the time of supply by the above provisions, then it will be-

(a) The date on which a periodical return has to be filed OR

(b) The date on which the CGST/SGST is paid, in any other case.

In the GST regime, the tax collection event will be the earliest of the dates as given above. The various events like issuing invoice/making payment in case of supply of goods /services or completion of event-in case of supply of service triggering the tax levy, confirms that the Government wants to ensure tax is collected at the earliest point of time.

Supply of Services

Time of supply under normal charge

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

(a) If invoice is issued within the period prescribed*,

(i) The date of issuing invoice OR

(ii) The date of receipt of payment - whichever is earlier

(b) If invoice is NOT issued within the period prescribed*,

(i) The date of provision of service OR

(ii) The date of receipt of payment – whichever is earlier

(c) Where the provisions of clause (a) or (b) do not apply, The date on which the recipient shows the receipt of services in his books of account

* before the provision of service, or within 30 days after the provision of service, as per invoice rules (other than insurance or banking companies, or financial instutions).

If the supplier of taxable service receives an amount up to Rs. 1000 rupees in excess of invoice amount, the time of supply for the extra amount shall be the date of issue of invoice (at the option of the supplier).

For clauses (a) and (b) -

(i) The supply shall be assumed to have been made to the extent it is covered by the invoice or the payment (as the case may be).

(ii) The date of receipt of payment shall be earlier of- -

The date on which he entered the payment in his books OR

The date on which the payment is credited to his bank account.

Example:

Date of invoice 15th May 2018
Date of receipt of payment 10th July 2018
Date when supplier recorded receipt in books 11th July 2018

Answer :- Time of supply will be 15th May 2018

Time of supply under reverse charge

Reverse charge means the liability to pay tax is by the recipient of goods/services instead of the supplier.

In case of reverse charge, the time of supply shall be the earliest of the following dates—

(a) The date of payment OR

(b) The date immediately after SIXTY (60) days from the date of issue of invoice by the supplier (30 days for goods)

If it is not possible to determine the time of supply under (a), (b) or (c), the time of supply shall be the date of entry in the books of account of the receiver of service.

For clause (a)- the date of payment shall be earlier of-

1. The date on which the recipient entered the payment in his books OR

2. The date on which the payment is debited from his bank account

When supplier is located outside India

In case of ‘associated enterprises’, where the supplier of service is located outside India, the time of supply shall be-

(a) the date of entry in the books of account of the receiver OR

(b) The date of payment - whichever is earlier

Example for reverse charge:

1. Date of payment 15th July 2018

2. Date of invoice 1st July 2018

3. Date of entry in books of receiver 18th July 2018

Answer:-

Situation (i) Time of supply of service 15th May 2018

Situation (ii) If for some reason time of supply could not be determined supply under (a), (b) or (c) then it would be 18th July 2018 i.e., date of entry in books

Time of supply for vouchers

In case of supply of vouchers, the time of supply is-

(a) The date of issue of voucher, if the supply can be identified at that point OR

(b) The date of redemption of voucher, in all other cases

When time of supply cannot be determined

If it is not possible to determine the time of supply by the above provisions, then it will be-

1. The date on which a periodical return has to be filed OR

2. The date on which the CGST/SGST is paid, in any other case.

In GST regime, the tax collection event will be earliest of the dates as given above. The various events like issuing invoice/making payment in case of supply of goods /services or completion of event

in case of supply of service triggering the tax levy, confirms that the Government wants to ensure tax is collected at the earliest point of time. This will be altogether a new concept for the current VAT and Central Excise taxpayers.