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June 13, 2020

Concept of Time of Supply under GST for Goods and Services

by Rubina Dsouza in Compliance Law, GST

Concept of Time of Supply under GST for Goods and Services

Introduction

Time of supply means that point of time when goods/services are considered to be supplied. When the seller knows the ‘time’, it helps him identify due date for payment of taxes. Before finding out the relevant provisions under Time of Supply, let us first get acquainted with the due date of issuance of Tax Invoice, which will help us later while understanding Time of Supply.

Section 31 – Due Date of issue of Tax Invoice

In case of Goods

1. In case of normal supply which is not on continuous basis:-

i. Cases where there is movement of goods. For instance, Mr A from Mumbai is delivering goods to Mr B from Delhi.

Invoice to be issued on or before date of removal of goods by supplier

ii. Cases where there is no movement of goods. For instance, Mr A owns a mobile shop. He sells mobile phones in his shop, over the counter only. Hence there is no movement of goods between the supplier and recipient.

Invoice to be issued on delivery of goods (i.e when goods are made available to the recipient)

2. In case of normal supply which is on continuous basis

For instance, supply of LPG gas through pipelines is an example of continuous supply.

Invoice to be issued on or before, earlier of date of issue of statement or date of payment

3. In case of Sale on Approval Basis

Invoice to be issued within 6 months from the date of removal

In case of Services

1.Other than Continuous Service

Invoice to be issued within 30 days of provision of service (45 days for banking & insurance company)

2. Continuous Service (service which generally takes more than 3 months for its completion)

i. If due date is ascertainable

Invoice to be issued on/before due date of payment

ii. If due date is not ascertainable

Invoice to be issued before/at the time the supplier of the service receives the payment

iii. Services pertaining to any Event

Invoice to be issued on/before completion of such event

Let us now refer to the Time of Supply provisions under the GST Regime

In case of Goods

1. Goods Taxable under Forward Charge

Time of Supply is earlier of:-

i. Date of Invoice

ii. Due Date of issue of Tax Invoice u/s 31

iii. Date of Payment

For instance, Mr A sold goods to Mr B on 20th February. The invoice was issued on 15th February. The payment was received on 28th February. Last date on which invoice should have been issued is 20th February. Time of Supply in this case is 15th February.

2. Goods Taxable under Reverse Charge

Time of Supply is earlier of:-

i. Date of Receipt of Goods

ii. Date of Payment

iii. 31st date from the date of issue of invoice

If it is not possible to determine the time of supply, the time of supply shall be the date of  entry in the books of account of the recipient.

In case of Services

  1. Services Taxable under Forward Charge if invoice is issued within the time limit

Time of Supply is earlier of:-

i. Date of Invoice

ii. Date of Payment

2. Services Taxable under Forward Charge if invoice is not issued within the time limit

Time of Supply is earlier of:-

i. Date of Provision of Service

ii. Date of Payment

Let us understand the above two points with the help of an example:-

Mr. A provides tour operator services.

RecipientDate of provision of ServiceInvoice DatePayment DateIs invoice issued within 30 daysTime of supply
X01/01/202010/01/202012/01/2020Yes10/01/2020
Y01/01/202005/01/202003/01/2020Yes03/01/2020
M03/01/202006/02/202012/01/2020No03/01/2020
N03/01/202006/02/202002/01/2020No02/01/2020
  1. Services Taxable under Reverse Charge

Time of Supply is earlier of:-

i. Date of Payment

ii. 61st date from the date of issue of invoice

If it is not possible to determine the time of supply, the time of supply shall be the date of entry in the books of account of the recipient

2. Services Taxable under Reverse Charge where Service Provider (outside India) is an associated enterprise

Time of Supply is earlier of:-

i. Date of Payment

ii. Date of entry in books of accounts of recipient

Time of Supply Provisions at a Glance

Common provision for Time of Supply

  1. In case of vouchers

i. If supply is identifiable

Time of Supply = Date of issue of voucher

ii. If supply is not identifiable

Time of Supply = Date of redemption of voucher

2. In case of Special Items (interest, late fee, penalty for delayed payment of consideration)

Time of Supply = Date on which supplier receives such addition in value

3. Residual Method

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

4. Periodic Return has to be filed

Time of Supply = Date on which return is to be filed

5. In any other Case

Time of Supply = Date on which GST is paid to the department

Time of Supply Provisions when there is a change in tax rate

Let us refer to the following example to understand the same:-

Tax rate changed from 8% to 12% of a particular service from 01/10/2019

Date of Provision of ServiceDate of InvoiceDate of PaymentTime of Supply
25/09/201927/09/201902/10/201927/09/2019
03/10/201927/09/201902/10/201902/10/2019
03/10/201927/09/201925/09/201925/09/2019

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