Understanding Time of Supply under GST

Under the Goods and Services Tax (GST) law, the determination of tax liability is closely linked to the occurrence of the charging event, known as the Time of Supply. This concept is crucial for both goods and services and is governed by specific provisions outlined in Sections 12, 13, 14, and other relevant rules of the Central Goods and Services Tax (CGST) Act, 2017.

1. Time of Supply of Goods:

(i) Default Rule:

• The earlier of the date of issuing the invoice or the last day by which the invoice should have been issued.
• The date of receipt of payment.

Notes:

• Date of payment is the earlier of entry in the books of accounts or the date credited to the bank account.
• Last date for invoice issuance is the date of removal of goods.

(ii) Time of Supply for Composition Scheme Suppliers:

• Date of the invoice in case of turnover up to 1.5 Crore.
• Involving movement of goods: Date of invoice at the time of removal.
• In other cases: Date of delivery.

(iii) Time of Supply for Excess Amount in Invoice:

• Date of issue of invoice or date of receipt of payment, as preferred by the supplier.

(iv) Time of Supply for Continuous Supply of Goods:

• Time when each statement is issued or the time when each payment is received, whichever is earlier.

(v) Time of Supply for Goods Sent on Approval Basis:

• Time when it becomes known that supply has taken place or six months from the date of removal, whichever is earlier.

(vi) Time of Supply under Reverse Charge Mechanism (RCM):

• Earlier of the date of receipt of goods, receipt of payment, or 30 days from the date of the invoice.

2. Time of Supply of Services:

(i) Default Rule:

• Invoice issued within 30 days: Date of issue of invoice or receipt of payment, whichever is earlier.
• Invoice issued after 30 days: Date of provision of service or receipt of payment, whichever is earlier.

(ii) Time of Supply of Services under RCM:

• In India: Date of receipt of payment or 60 days from the date of the invoice, whichever is earlier.
• Outside India (Associated enterprises): Date of entry in the books of the recipient or date of receipt of payment, whichever is earlier.

3. Time of Supply of Goods/Services (Common Rules):

(i) Time of Supply of Vouchers for Goods & Services:

• If supply is identifiable at the point of issue: Date of issue of voucher.
• If supply is not identifiable: Date of redemption of voucher.

(ii) Time of Supply for Addition in Value:

• Date on which interest, late fees, or penalty is received by the supplier.

(iii) Time of Supply in Construction Projects (Post 1.4.19):

• Date of issue of completion certificate or first occupation of the project, whichever is earlier.

(iv) Time of Supply in Case of Change in Tax Rate:

• Supply completed before the date of change: Date of receipt of payment within 4 working days or date of bank entry.
• Invoice issued before the date of change: Date of book entry or date of bank entry, whichever is earlier.
• Payment received before the date of change: Date of bank entry.

(v) Time of Supply for Residual Cases:

• For periodical return filers: Due date of filing the return.
• In other cases: Date of payment of tax.

Conclusion:

Navigating the complexities of the time of supply provisions under GST is crucial for businesses and professionals. The government’s emphasis on collecting tax at the earliest necessitates a clear understanding of these provisions to ensure compliance and accurate reconciliation between financial and GST records. It is essential for businesses to stay updated on any amendments or changes in the GST law to maintain a seamless tax reporting process.