Here is the free study Material on Time of Supply under GST

Study material on Time of Supply

Time of supply of goods under GST [Video Tutorial]

Time of Supply in GST : Analysis

GST Time of Supply of Goods and Services with Examples

Extend Time of supply of goods and services under RCM : ICAI suggestion

Deferment of GST levy till Time of Supply : ICAI seeks clarification

Relevant Sections of GST on Time of Supply

Section 12 CGST Act 2017 ; Time of supply of goods.

Section 13 CGST Act 2017 ; Time of supply of services

Relevant Judgments

GST on Transfer of development right by land owner to be paid on date when building is handed over to land owner : AAR

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

A voucher has been defined in the CGST Act 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 a specific supply i.e. supply which 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 a general purpose voucher which can be used for multiple purposes. For example a Rs. 1000/- voucher issued by Shopper’s Stop store can be used for buying any product or service at any Shopper’s Stop store. The 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 the date of issue of voucher. However, in all other cases of supply of
vouchers, the time of supply is the 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 aforesaid 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 supplier 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 the said amount is received on 15.12.17. The time of supply of such amount (Rs. 1000/-) will be 15.12.17 i.e. the date on which it is received by the supplier and tax liability on this is to be discharged by 20.01.18.

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

The normal time of supply rules changes if there is a change in the rate of tax of supply of goods or services. In this scenario, time of supply has to be determined in the following manner:

Supply is completed before the change in rate of tax

Supply is completed after the change in rate of tax

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. However, in cases of change in rate of tax, the date of receipt of payment is the date of credit in the bank account if such credit is after four working days from the date of change in rate of tax.

Download PDF File

Related Topic on GST

Time of Supply under Model GST Law (MGL) 

1. Section 12 of Model GST Law  deals with Supply of Goods
2. section 13 of Model GST Law  & 14 deals with Supply of Services.

A solds goods to B for Rs.100000/-. Various events of sale transactions are as under:

GST Law :  Tax needs to be paid within 20 days of closing of month of time of supply.

Question : Whether the GST needs to be paid by

1. 20^th May 2017 ?
2. 20^th june 2017 ?
3. 20^th july 2017 ?

Time of Supply of Goods can be divided under five broad heads.

1. Normal Goods section 12(2)
2. Continuous Supply of Goods section 12(3)
3. Goods under reverse Charge section 12(5)
4. Goods Sent on Sale or Approval Basis section 12(6)
5. Residual Goods Section 12(7)

1. Time of Supply of Goods in case of Normal Goods 

If goods are required to be removed then

 Date of removal.

 Section 2 (83) “removal’’, in relation to goods, means –

(a) dispatch of the goods for delivery by the supplier thereof or by any other person acting on behalf of such supplier, or

(b) collection of the goods by the recipient thereof or by any other person acting on behalf of such recipient;

Example :

If goods are not required to be removed then

 [This can happen when goods are physically not capable of moving, supplied in assembled or installed form, supplied by the supplier to his agent or his principal.]

Earliest of any of  followings :-

• Date of making goods available to the recipient. [i.e when the goods are placed at the disposal of the recipient.]
• Date of Receipt of Payment of Goods by supplier.[ i.e Earlier of the date of Credit in bank or entry in Books ]
• Date of Invoice.
• Record date by recipient in his books.

• Event	Invoice Issued by  A	Making available Goods to Recipient	Entry of Payment made by B	Entry of Receipt of Payment by A	Credit of amount in Bank account of A	Time of Supply
  Goods  Not Required to be Removed	10.06.2017	10.06.2017	01.05.2017	02.06.2017	05.06.2017	01.05.2017

2. Time of Supply of Goods in case of Continuous Supply of Goods.

As per Section 2 (30) “continuous supply of goods” means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis. As to which of the cases will be regarded as continuous supply of goods may be specified by notification by Govt.

If successive statements of accounts are issued or successive payments are involved, then

1. Date of expiry of the period to which such successive statements of accounts
2. Date of expiry of such successive payment period.
   

   Event- Continuous Supply of Goods	Date of invoice / removal by  A	Date of receipt of invoice by B	Date of statement by supplier i.e A	Date of expiry of successive statements of A/c	Date of expiry of successive payment	Time of Supply (5) or (6)
   (1)	(2)	(3)	(4)	(5)	(6)
   Supply of RMC	10.04.2017	11.04.2017
   Supply of RMC	11.04.2017	12.04.2017
   Supply of RMC	13.04.2017	15.04.2017	18.04.2017	18.04.2017	21.04.2017	18.04.2017

If no such statement of account, then

Earliest of any of the followings:-

• Date of Invoice (or any other document) or
• Date of receipt of payment
  

  Event- Continuous Supply of Goods	Date of invoice  by  A	Date of receipt of payment by A	Time of Supply
  (1)	(2)	(3)
  Supply of RMC	21.06.2017	22.06.2017	21.06.2017
  Supply of RMC	22.06.2017	23.06.2017	22.06.2017
  Supply of RMC	26.06.2017	27.06.2017	26.06.2017

3. Time of Supply of Goods in case of Reverse Charge .

Earliest of any of followings :-

• Date of Receipt of goods by recipient
• Date of Payment [Earlier date of i) Debit in bank or ii) entry in books of accounts of Recipients]
• Date of Receipt of Invoice
• Date of Debits in Books of Accounts of recipient
  

  Event-	Receipt of goods by recipient	Payment Entry in Books by recipient	Date of  Debit  in the bank account of recipient	Receipt of Invoice	Debits in Books of Accounts of recipient	Time of Supply
  (1)	(2)	(3)	(4)	(5)	(6)
  Reverse Charge	29.04.2017	28.04.2017	29.04.2017	26.04.2017	25.04.2017	25.04.2017

Section 2 (85) “reverse charge’’, means the liability to pay tax by the person receiving goods and / or services instead of the person supplying the goods and / or services in respect of such categories of supplies as the Central or a State Government may, on the recommendation of the Council, by notification, specify 

4. Time of Supply of Goods in case of Sale or Approval basis ( Goods removed before it is known supply will take place or not) 

Earlier of the time :-

• When it becomes known that supply has taken place OR
• Six months from the date of removal (Removal with purpose of giving up control not ownership as transfer of property is not one of the precondition of supply) 
  

  Event-	Date of Removal	Date of receipt by recipient	Date of approval	Date of expiry of 6 months from the date of removal	Time of Supply
  (1)	(2)	(3)	(4)	(5)
  Goods sent/taken on approval basis or sale/return or similar term	10.07.2017	20.07.2017	11.08.2017	09.01.2018	11.08.2017
  	14.06.2017	19.06.2017	Awaited	13.12.2017	13.12.2017

5. Time of Supply of Goods in case of Residual Supplies.

[Where it is impossible to determine the Time of Supply ]

Earlier of Followings

• Date on which Periodical Return is to be filed OR
• Date on which CGST / SGST is paid, 

Section 2 (83) “removal’’, in relation to goods, means –

(a) dispatch of the goods for delivery by the supplier thereof or by any other person acting on behalf of such supplier, or

(b) collection of the goods by the recipient thereof or by any other person acting on behalf of such recipient; 

Time of Supply of Services can be divided under six broad heads.

1. Normal Supply
2. Continuous Supply
3. Service under Reverse Charge
4. Incomplete Supplies
5. Residual Supplies
6. Supplies due to change in rate of Tax.

1. Time of Supply of Services in case of Normal Supply of Services 

1. If Invoice is issued within prescribed period (to be prescribed by Rules) then time of supply of services to pay GST will arise earliest of

• Date of Issue of Invoice
• Date of receipt of payment [ Date on which the payment is entered in the books of accounts of the supplier or the date on which the payment is credited to his bank account, whichever is earlier]

2. If Invoice is not issued, time of supply of services to pay GST will arise earliest of

• Date of completion of service.
• Date of receipt of payment [ Date on which the payment is entered in the books of accounts of the supplier or the date on which the payment is credited to his bank account, whichever is earlier]

3. If the above provisions (i) and (ii) do not apply then time of supply of services to pay GST will shall be date on which the recipient shows the receipt of services in his books of account.

2. Time of Supply of Services in case of Continuous Supply of Services.

[Govt. may notify services which are deemed to be continuous supply of Services ]

1. where the due date of payment is ascertainable from the contract, then time of supply of services shall be

Date on which the payment is liable to be made by the recipient of service, whether or not any invoice has been issued or any payment has been received by the supplier of service;

2. where the due date of payment is not ascertainable from the contract, , then time of supply of services shall be earliest of each such time when the supplier of service

• Receives the payment
• Issues an invoice

3. where the payment is linked to the completion of an event, then time of supply of services shall be the time of completion of that event

3. Time of Supply of Services in case of Reverse Charge

Earliest of

(a)  Date of receipt of services, or

(b)  Date on which the payment is made [Date on which the payment is entered in the books of accounts of the recipient or the date on which the payment is debited in his bank account, whichever is earlier], or

(c)  Date of receipt of invoice, or

(d)  Date of debit in the books of accounts. 

Section 2 (85) “reverse charge’’, means the liability to pay tax by the person receiving goods and / or services instead of the person supplying the goods and / or services in respect of such categories of supplies as the Central or a State Government may, on the recommendation of the Council, by notification, specify 

4. Time of Supply of Services in case of  Incomplete Supplies of Services

In a case where the supply of services ceases under a contract before the completion of the supply, such services shall be deemed to have been provided at the time when the supply ceases.

5. Time of Supply of Services in case of Residual Supplies of Services [where it is impossible to determine the time of supply of services]

Time of supply of services shall be earlier of the

• Date on which Periodical Return is to be filed OR
• The date on which CGST / SGST is paid,

6. Supply of Services due to Change in Rate of Tax

Service provided before change in rate of tax then

1. where the invoice has been issued and the payment is also received after the change in effective rate of tax, the time of supply shall be earliest of
   1. Date of receipt of payment or
   2. Date of issue of invoice,

Illustration -1

For our analysis let’s consider a case that the Tax rate till 30^th Nov 2017 is 18% and

From 1^st Dec 2017 the tax rate is being increased to 18.5%.

A Ltd agrees to do the service of diesel generator and accordingly it has

i) completed the service on 20^th Nov 2017

ii) Issued an invoice on 5^th Dec 2017 and

iii) Received the payment on 10^th Dec 2017.

In this case, the service has been provided before the change of the tax rate i.e prior to 1^st Dec 2017 and the earliest date and the time of supply is 5^th Dec 2017 as invoice is issued on 5^th Dec 2017 and payment is received on 10^th Dec 2017 (earliest of the invoice or the payment date). The tax rate applicable here is 18%.

Illustration -2

For our analysis let’s consider a case that the Tax rate till 30^th Nov 2017 is 18% and

From 1^st Dec 2017 the tax rate is being increased to 18.5%.

A Ltd agrees to do the service of diesel generator and accordingly it

i) Completed the service on 20^th Nov 2017 and

ii) Received the payment on 7^th Dec 2017.

ii) Has issued an invoice on 15^th Dec 2017 and

In this case, the service has been provided before the change of the tax rate i.e prior to 1^st Dec 2017 and the earliest date and the time of supply is 7^th Dec 2017 as payment is received 7^th Dec 2017 invoice is issued on 15^th Dec 2017 (earliest of the invoice or the payment date). The tax rate applicable here is 18%.

2. where the invoice has been issued prior to change in effective rate of tax but the payment is received after the change in effective rate of tax, the time of supply shall be the date of issue of invoice;

For our analysis let’s consider a case that the Tax rate till 30^th Nov 2017 is 18% and From 1^st Dec 2017 the tax rate is being increased to 18.5%.

Illustration -3

B Ltd enters into a contract to provide special security with C Ltd for their factory located in Badi from the period 1^st Nov 2017 to 30^th Nov 2017. B Ltd issues an invoice on 25^th Nov 2017 and receives payment on 9^th Dec 2017.

Invoice has been issued on 25^th Nov 2017 and service is completed on 30^thNov 2017 and these two dates are before the date of effective change of tax rate, the time of supply for services is 25^th Nov 2017, so the effective tax rate will be 18%.

Illustration 4

 Let’s say there was increase in tax rate from 18% to 20% w.e.f. 1-6-2017. What is the tax rate applicable when services provided and invoice issued before change in rate in April 2017, but payment received after change in rate in June 2017?

Ans. The old rate of 18% shall be applicable as services are provided prior to 1-6-2017.

3.where the payment is received before the change in effective rate of tax, but the invoice for the same has been issued after the change in effective rate of tax, the time of supply shall be the date of receipt of payment;

Illustration -5

For our analysis let’s consider a case that the Tax rate till 30^th Nov 2017 is 18% and From 1^st Dec 2017 the tax rate is being increased to 18.5%

B Ltd enters into a contract to provide special security with C Ltd for their factory located in Badi from the period 1^st Nov 2017 to 30^th Nov 2017. B Ltd receives payment on 19^th Nov 2017 and issues an invoice on 4^th Dec 2017.

Payment has been received on 19^th Nov 2017 and service is completed on 30^thNov 2017 and these two dates are before the date of effective change of tax rate, the time of supply for services is 19^th Nov 2017, so the effective tax rate will be 18%.

Service provided after change in effective rate of tax then

1. where the payment is received after the change in effective rate of tax but the invoice has been issued prior to the change in effective rate of tax, the time of supply shall be the date of receipt of payment;Illustration -6For our analysis let’s consider a case that the Tax rate till 30^th Nov 2017 is 18% and From 1^st Dec 2017 the tax rate is being increased to 18.5% .   X Ltd agrees to do preventive maintenance for all the critical machinery in the factory by 25^th of Dec 2017 and accordingly it has received payment on 28^th of Dec 2017 and issued an invoice on 27^th of Nov 2017.In the above case, the time of supply will be the date on which payment has been received i.e 28^th Dec 2017 and the effective tax rate would be 18.5% as service is completed after the tax rate change.
2. where the invoice has been issued and the payment is received before the change in effective rate of tax, the time of supply shall be earliest of
   1. Date of receipt of payment or
   2. Date of issue of invoicellustration -7For our analysis let’s consider a case that the Tax rate till 30^th Nov 2017 is 18% and From 1^st Dec 2017 the tax rate is being increased to 18.5% . A Ltd agrees to do the service of diesel generator and accordingly it has issued an invoice on 15^th Nov 2017 ,received the payment on 17^th Nov 2017 and completed the service on 20^th Dec 2017.In the case, the effective tax rate would be 18%, as the time of supply is 15^thNov 2017, this is the earliest date of issue of invoice or receipt of payment.

3.where the invoice has been issued after the change in effective rate of tax but the payment is received before the change in effective rate of tax, the time of supply shall be the date of issue of invoice.

For our analysis let’s consider a case that the Tax rate till 30^th Nov 2017 is 18% and From 1^st Dec 2017 the tax rate is being increased to 18.5%

A Ltd agrees to do the service of diesel generator and accordingly r eceived the payment on 7^th Nov 2017.It has issued an invoice on 10^th Dec 2017 and completed the service on 20^th Dec 2017

In this case, the time of supply will be the issue of invoice date i.e 10^th Dec 2017 and the tax rate will be 18.5%

Note

1. “the date of receipt of payment” shall be the date on which the payment is entered in the books of accounts of the supplier or the date on which the payment is credited to his bank account, whichever is earlier:
2. Date of receipt of payment shall be the date of credit in the bank account when such credit in the bank account is after four working days from the date of change in the effective rate of tax.

Q :Suppose part advance payment is made or invoice issued is for part payment, whether the time of supply will cover the full supply?

Ans. No. The supply shall be deemed to have been made to the extent it is covered by the invoice or the part payment.

Meaning of ‘supplier’

“Supplier” in relation to any goods and/or services shall mean the person supplying the said goods and/or services and shall include an agent acting as such on behalf of such supplier in relation to the goods and/or services supplied – clause 2(91) of GST Model Law, 2016.

 Meaning of ‘recipient’

As per clause 2(80) of GST Model Law, 2016, “recipient” of supply of goods and/or services means—

Explanation – The expression “recipient” shall also include an agent acting as such on behalf of the recipient in relation to the goods and/or services supplied.

Free Education Guide on Goods & Service Tax (GST)

Time of Supply under Model GST Law (MGL) 

1. Section 12 of Model GST Law  deals with Supply of Goods
2. section 13 of Model GST Law  & 14 deals with Supply of Services.

A solds goods to B for Rs.100000/-. Various events of sale transactions are as under:

GST Law :  Tax needs to be paid within 20 days of closing of month of time of supply.

Question : Whether the GST needs to be paid by

1. 20^th May 2017 ?
2. 20^th june 2017 ?
3. 20^th july 2017 ?

Time of Supply of Goods can be divided under five broad heads.

1. Normal Goods section 12(2)
2. Continuous Supply of Goods section 12(3)
3. Goods under reverse Charge section 12(5)
4. Goods Sent on Sale or Approval Basis section 12(6)
5. Residual Goods Section 12(7)

1. Time of Supply of Goods in case of Normal Goods 

If goods are required to be removed then

 Date of removal.

 Section 2 (83) “removal’’, in relation to goods, means –

(a) dispatch of the goods for delivery by the supplier thereof or by any other person acting on behalf of such supplier, or

(b) collection of the goods by the recipient thereof or by any other person acting on behalf of such recipient;

Example :

If goods are not required to be removed then

 [This can happen when goods are physically not capable of moving, supplied in assembled or installed form, supplied by the supplier to his agent or his principal.]

Earliest of any of  followings :-

• Date of making goods available to the recipient. [i.e when the goods are placed at the disposal of the recipient.]
• Date of Receipt of Payment of Goods by supplier.[ i.e Earlier of the date of Credit in bank or entry in Books ]
• Date of Invoice.
• Record date by recipient in his books.

• Event	Invoice Issued by  A	Making available Goods to Recipient	Entry of Payment made by B	Entry of Receipt of Payment by A	Credit of amount in Bank account of A	Time of Supply
  Goods  Not Required to be Removed	10.06.2017	10.06.2017	01.05.2017	02.06.2017	05.06.2017	01.05.2017

2. Time of Supply of Goods in case of Continuous Supply of Goods.

As per Section 2 (30) “continuous supply of goods” means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis. As to which of the cases will be regarded as continuous supply of goods may be specified by notification by Govt.

If successive statements of accounts are issued or successive payments are involved, then

1. Date of expiry of the period to which such successive statements of accounts
2. Date of expiry of such successive payment period.
   

   Event- Continuous Supply of Goods	Date of invoice / removal by  A	Date of receipt of invoice by B	Date of statement by supplier i.e A	Date of expiry of successive statements of A/c	Date of expiry of successive payment	Time of Supply (5) or (6)
   (1)	(2)	(3)	(4)	(5)	(6)
   Supply of RMC	10.04.2017	11.04.2017
   Supply of RMC	11.04.2017	12.04.2017
   Supply of RMC	13.04.2017	15.04.2017	18.04.2017	18.04.2017	21.04.2017	18.04.2017

If no such statement of account, then

Earliest of any of the followings:-

• Date of Invoice (or any other document) or
• Date of receipt of payment
  

  Event- Continuous Supply of Goods	Date of invoice  by  A	Date of receipt of payment by A	Time of Supply
  (1)	(2)	(3)
  Supply of RMC	21.06.2017	22.06.2017	21.06.2017
  Supply of RMC	22.06.2017	23.06.2017	22.06.2017
  Supply of RMC	26.06.2017	27.06.2017	26.06.2017

3. Time of Supply of Goods in case of Reverse Charge .

Earliest of any of followings :-

• Date of Receipt of goods by recipient
• Date of Payment [Earlier date of i) Debit in bank or ii) entry in books of accounts of Recipients]
• Date of Receipt of Invoice
• Date of Debits in Books of Accounts of recipient
  

  Event-	Receipt of goods by recipient	Payment Entry in Books by recipient	Date of  Debit  in the bank account of recipient	Receipt of Invoice	Debits in Books of Accounts of recipient	Time of Supply
  (1)	(2)	(3)	(4)	(5)	(6)
  Reverse Charge	29.04.2017	28.04.2017	29.04.2017	26.04.2017	25.04.2017	25.04.2017

Section 2 (85) “reverse charge’’, means the liability to pay tax by the person receiving goods and / or services instead of the person supplying the goods and / or services in respect of such categories of supplies as the Central or a State Government may, on the recommendation of the Council, by notification, specify 

4. Time of Supply of Goods in case of Sale or Approval basis ( Goods removed before it is known supply will take place or not) 

Earlier of the time :-

• When it becomes known that supply has taken place OR
• Six months from the date of removal (Removal with purpose of giving up control not ownership as transfer of property is not one of the precondition of supply) 
  

  Event-	Date of Removal	Date of receipt by recipient	Date of approval	Date of expiry of 6 months from the date of removal	Time of Supply
  (1)	(2)	(3)	(4)	(5)
  Goods sent/taken on approval basis or sale/return or similar term	10.07.2017	20.07.2017	11.08.2017	09.01.2018	11.08.2017
  	14.06.2017	19.06.2017	Awaited	13.12.2017	13.12.2017

5. Time of Supply of Goods in case of Residual Supplies.

[Where it is impossible to determine the Time of Supply ]

Earlier of Followings

• Date on which Periodical Return is to be filed OR
• Date on which CGST / SGST is paid, 

Section 2 (83) “removal’’, in relation to goods, means –

(a) dispatch of the goods for delivery by the supplier thereof or by any other person acting on behalf of such supplier, or

(b) collection of the goods by the recipient thereof or by any other person acting on behalf of such recipient; 

Time of Supply of Services can be divided under six broad heads.

1. Normal Supply
2. Continuous Supply
3. Service under Reverse Charge
4. Incomplete Supplies
5. Residual Supplies
6. Supplies due to change in rate of Tax.

1. Time of Supply of Services in case of Normal Supply of Services 

1. If Invoice is issued within prescribed period (to be prescribed by Rules) then time of supply of services to pay GST will arise earliest of

• Date of Issue of Invoice
• Date of receipt of payment [ Date on which the payment is entered in the books of accounts of the supplier or the date on which the payment is credited to his bank account, whichever is earlier]

2. If Invoice is not issued, time of supply of services to pay GST will arise earliest of

• Date of completion of service.
• Date of receipt of payment [ Date on which the payment is entered in the books of accounts of the supplier or the date on which the payment is credited to his bank account, whichever is earlier]

3. If the above provisions (i) and (ii) do not apply then time of supply of services to pay GST will shall be date on which the recipient shows the receipt of services in his books of account.

2. Time of Supply of Services in case of Continuous Supply of Services.

[Govt. may notify services which are deemed to be continuous supply of Services ]

1. where the due date of payment is ascertainable from the contract, then time of supply of services shall be

Date on which the payment is liable to be made by the recipient of service, whether or not any invoice has been issued or any payment has been received by the supplier of service;

2. where the due date of payment is not ascertainable from the contract, , then time of supply of services shall be earliest of each such time when the supplier of service

• Receives the payment
• Issues an invoice

3. where the payment is linked to the completion of an event, then time of supply of services shall be the time of completion of that event

3. Time of Supply of Services in case of Reverse Charge

Earliest of

(a)  Date of receipt of services, or

(b)  Date on which the payment is made [Date on which the payment is entered in the books of accounts of the recipient or the date on which the payment is debited in his bank account, whichever is earlier], or

(c)  Date of receipt of invoice, or

(d)  Date of debit in the books of accounts. 

Section 2 (85) “reverse charge’’, means the liability to pay tax by the person receiving goods and / or services instead of the person supplying the goods and / or services in respect of such categories of supplies as the Central or a State Government may, on the recommendation of the Council, by notification, specify 

4. Time of Supply of Services in case of  Incomplete Supplies of Services

In a case where the supply of services ceases under a contract before the completion of the supply, such services shall be deemed to have been provided at the time when the supply ceases.

5. Time of Supply of Services in case of Residual Supplies of Services [where it is impossible to determine the time of supply of services]

Time of supply of services shall be earlier of the

• Date on which Periodical Return is to be filed OR
• The date on which CGST / SGST is paid,

6. Supply of Services due to Change in Rate of Tax

Service provided before change in rate of tax then

1. where the invoice has been issued and the payment is also received after the change in effective rate of tax, the time of supply shall be earliest of
   1. Date of receipt of payment or
   2. Date of issue of invoice,

Illustration -1

For our analysis let’s consider a case that the Tax rate till 30^th Nov 2017 is 18% and

From 1^st Dec 2017 the tax rate is being increased to 18.5%.

A Ltd agrees to do the service of diesel generator and accordingly it has

i) completed the service on 20^th Nov 2017

ii) Issued an invoice on 5^th Dec 2017 and

iii) Received the payment on 10^th Dec 2017.

In this case, the service has been provided before the change of the tax rate i.e prior to 1^st Dec 2017 and the earliest date and the time of supply is 5^th Dec 2017 as invoice is issued on 5^th Dec 2017 and payment is received on 10^th Dec 2017 (earliest of the invoice or the payment date). The tax rate applicable here is 18%.

Illustration -2

For our analysis let’s consider a case that the Tax rate till 30^th Nov 2017 is 18% and

From 1^st Dec 2017 the tax rate is being increased to 18.5%.

A Ltd agrees to do the service of diesel generator and accordingly it

i) Completed the service on 20^th Nov 2017 and

ii) Received the payment on 7^th Dec 2017.

ii) Has issued an invoice on 15^th Dec 2017 and

In this case, the service has been provided before the change of the tax rate i.e prior to 1^st Dec 2017 and the earliest date and the time of supply is 7^th Dec 2017 as payment is received 7^th Dec 2017 invoice is issued on 15^th Dec 2017 (earliest of the invoice or the payment date). The tax rate applicable here is 18%.

2. where the invoice has been issued prior to change in effective rate of tax but the payment is received after the change in effective rate of tax, the time of supply shall be the date of issue of invoice;

For our analysis let’s consider a case that the Tax rate till 30^th Nov 2017 is 18% and From 1^st Dec 2017 the tax rate is being increased to 18.5%.

Illustration -3

B Ltd enters into a contract to provide special security with C Ltd for their factory located in Badi from the period 1^st Nov 2017 to 30^th Nov 2017. B Ltd issues an invoice on 25^th Nov 2017 and receives payment on 9^th Dec 2017.

Invoice has been issued on 25^th Nov 2017 and service is completed on 30^thNov 2017 and these two dates are before the date of effective change of tax rate, the time of supply for services is 25^th Nov 2017, so the effective tax rate will be 18%.

Illustration 4

 Let’s say there was increase in tax rate from 18% to 20% w.e.f. 1-6-2017. What is the tax rate applicable when services provided and invoice issued before change in rate in April 2017, but payment received after change in rate in June 2017?

Ans. The old rate of 18% shall be applicable as services are provided prior to 1-6-2017.

3.where the payment is received before the change in effective rate of tax, but the invoice for the same has been issued after the change in effective rate of tax, the time of supply shall be the date of receipt of payment;

Illustration -5

For our analysis let’s consider a case that the Tax rate till 30^th Nov 2017 is 18% and From 1^st Dec 2017 the tax rate is being increased to 18.5%

B Ltd enters into a contract to provide special security with C Ltd for their factory located in Badi from the period 1^st Nov 2017 to 30^th Nov 2017. B Ltd receives payment on 19^th Nov 2017 and issues an invoice on 4^th Dec 2017.

Payment has been received on 19^th Nov 2017 and service is completed on 30^thNov 2017 and these two dates are before the date of effective change of tax rate, the time of supply for services is 19^th Nov 2017, so the effective tax rate will be 18%.

Service provided after change in effective rate of tax then

1. where the payment is received after the change in effective rate of tax but the invoice has been issued prior to the change in effective rate of tax, the time of supply shall be the date of receipt of payment;Illustration -6For our analysis let’s consider a case that the Tax rate till 30^th Nov 2017 is 18% and From 1^st Dec 2017 the tax rate is being increased to 18.5% .   X Ltd agrees to do preventive maintenance for all the critical machinery in the factory by 25^th of Dec 2017 and accordingly it has received payment on 28^th of Dec 2017 and issued an invoice on 27^th of Nov 2017.In the above case, the time of supply will be the date on which payment has been received i.e 28^th Dec 2017 and the effective tax rate would be 18.5% as service is completed after the tax rate change.
2. where the invoice has been issued and the payment is received before the change in effective rate of tax, the time of supply shall be earliest of
   1. Date of receipt of payment or
   2. Date of issue of invoicellustration -7For our analysis let’s consider a case that the Tax rate till 30^th Nov 2017 is 18% and From 1^st Dec 2017 the tax rate is being increased to 18.5% . A Ltd agrees to do the service of diesel generator and accordingly it has issued an invoice on 15^th Nov 2017 ,received the payment on 17^th Nov 2017 and completed the service on 20^th Dec 2017.In the case, the effective tax rate would be 18%, as the time of supply is 15^thNov 2017, this is the earliest date of issue of invoice or receipt of payment.

3.where the invoice has been issued after the change in effective rate of tax but the payment is received before the change in effective rate of tax, the time of supply shall be the date of issue of invoice.

For our analysis let’s consider a case that the Tax rate till 30^th Nov 2017 is 18% and From 1^st Dec 2017 the tax rate is being increased to 18.5%

A Ltd agrees to do the service of diesel generator and accordingly r eceived the payment on 7^th Nov 2017.It has issued an invoice on 10^th Dec 2017 and completed the service on 20^th Dec 2017

In this case, the time of supply will be the issue of invoice date i.e 10^th Dec 2017 and the tax rate will be 18.5%

Note

1. “the date of receipt of payment” shall be the date on which the payment is entered in the books of accounts of the supplier or the date on which the payment is credited to his bank account, whichever is earlier:
2. Date of receipt of payment shall be the date of credit in the bank account when such credit in the bank account is after four working days from the date of change in the effective rate of tax.

Q :Suppose part advance payment is made or invoice issued is for part payment, whether the time of supply will cover the full supply?

Ans. No. The supply shall be deemed to have been made to the extent it is covered by the invoice or the part payment.

Meaning of ‘supplier’

“Supplier” in relation to any goods and/or services shall mean the person supplying the said goods and/or services and shall include an agent acting as such on behalf of such supplier in relation to the goods and/or services supplied – clause 2(91) of GST Model Law, 2016.

 Meaning of ‘recipient’

As per clause 2(80) of GST Model Law, 2016, “recipient” of supply of goods and/or services means—

Explanation – The expression “recipient” shall also include an agent acting as such on behalf of the recipient in relation to the goods and/or services supplied.

Free Education Guide on Goods & Service Tax (GST)