FAQ’s Time of Supply Under GST

Time of Supply Under GST is an important issue. Its understanding is very important to determine the point of taxation so that we can know when the tax is to be paid to the government. The time of supply fixes the point when the liability to charge GST arises. It also indicates when a supply is  deemed to have been made.

Below are the FAQ’s on Time of Supply Under GST.

These Frequently asked questions have been taken from Final GST FAQ 3rd Edition of December, 2018 released by Central Board of Indirect Taxes (CBIC).

FAQ’s on Time of Supply Under GST

What is time of supply

Ans. The time of supply fixes the point when the liability to charge GST arises. It also indicates when a supply is  deemed to have been made. The CGST/SGST Act provides separate time of supply for goods and services.

When does the liability to pay GST arise in respect of supply of goods

Ans. Section 12 of the CGST/SGST Act provides for time of supply of goods. The time of supply of goods shall be the earlier of the following namely,

the date of issue of invoice by the supplier or the last date on which he is required under Section 31, to issue the invoice with respect to the supply; or

the date on which the supplier receives the payment with respect to the supply.

However, vide Notification No. 66/2017-Central Tax dated 15.11.2017, liability to pay tax at the time of receipt of advance has been relaxed in case of goods.

When does the liability to pay GST arise in respect of supply of services

Ans. Section 13 of the CGST/SGST Act provides for time of supply of services. The time of supply of services shall be  the earlier of the following namely,

the date of issue of invoice by the supplier if the invoice is issued within the period prescribed under section 31 or the date of receipt of payment whichever is earlier; or

the date of provision of service, if the invoice is not issued within the period prescribed under section 31 or the date of receipt of payment whichever is earlier.

the date on which the recipient shows the receipt of services in his books of account, in case where the provisions of clause (a) and (b) do not apply.

What is time of supply in case of supply of vouchers in respect of goods and services

Ans. The time of supply of voucher in respect of goods and services shall be;

a) the date of issue of voucher, if the supply is identifiable at that point; or

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

Where it is  not possible to determine the time of supply in terms of sub-section 2, 3, 4  of  Section 12 or that of Section 13 of CGST/SGST Act, how will time of supply be determined

Ans. There is a residual entry in Section 12(5) as well as 13 (5) which says that if periodical return has to be filed, then the due date of filing of such periodical return shall be the time of supply. In other cases, it will be the date on which the CGST/SGST/IGST is actually paid.

What does date of receipt of payment mean

Ans. It is the earliest of 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.

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 of services shall be deemed to have been made to the extent it is covered by the invoice or the part payment. However, for goods payment of tax will need to be made upon date of issue of invoice, irrespective of the fact whether or not advance or part payment is received.

What is the time of supply of goods in case of tax payable under reverse charge

Ans. The time of supply will be the earliest of the following dates:

1.) date of receipt of goods; or

2.) date on which payment is made; or

3.) the date immediately following 30 days from the date of issue of invoice by the supplier.

Where it is not possible to determine the time of supply under the above three clauses, the time of supply shall be the date of entry in the books of account of the recipient of supply.

What is the time of supply of service in case of tax payable under reverse charge

Ans. The time of supply will be the earlier of the following dates:

a) date on which payment is made; or

b) the date immediately following sixty days from the date of issue of invoice by the supplier.

What is the time of supply applicable with regard to addition in the value by way of interest, late fee or penalty or any delayed payment of consideration

Ans. The time of supply with regard to an addition in value on account of interest, late fee or penalty or delayed consideration shall be the date on which the supplier received such additional consideration.

Is there any change in time of supply, where supply is completed prior to or after change in rate of tax

Ans. Yes. In such cases  provisions  of  Section  14  will  apply.

What is the time of supply, where supply is completed prior to change in rate of tax

Ans. In such cases time of supply will be

where the invoice for the same has been issued and the payment is also received after the change in rate of tax, the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; (However, for supply of goods payment of tax need to be made only at the time of issue of invoice in terms of notification 66/2017- Central Tax dated 15.11.2017) or

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

where the payment is received before the change in rate of tax, but the invoice for the same has been issued after the change in rate of tax, the time of supply shall be the date of receipt of payment; (However for supply of goods payment of tax need to be made only at the time of issue of invoice in terms of notification 66/2017-Central Tax dated 15.11.2017)

What is the time of supply, where supply is completed after the change in rate of tax

Ans. In such cases time of supply will be :

where the payment is received after the change in rate of tax but the invoice has been issued prior to the change in rate of tax, the time of supply shall be the date of receipt of payment; (However for supply of goods payment of tax need to be made only at the time of issue of invoice in terms of notification 66/2017-Central Tax dated 15.11.2017) or

where the invoice has been issued and the payment is received before the change in rate of tax, the time of supply shall be the date of receipt of payment or date of issue of invoice, whichever is earlier; or; (However for supply of goods payment of tax need to be made only at the time of issue of invoice in terms of notification 66/2017-Central Tax dated 15.11.2017)

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

Lets say there was increase in tax rate from 18% to 20% w.e.f.1.9.2017. What is the tax rate applicable when services provided and invoice issued before change in rate in July, 2017, but payment received after change in rate in September, 2017

Ans. The old rate of 18% shall be applicable as services are provided prior to 1.9.2017.

Lets say there was increase in tax rate from 18% to 20% w.e.f. 1.9.2017. What is the tax rate applicable when goods are supplied and invoice issued after change in rate in September, 2017, but full advance payment was already received in July, 2017

Ans. The new rate of 20% shall be applicable as goods are supplied and invoice issued after 1.9.2017

What is the time period within which invoice has to be issued for supply of Goods

Ans. As per Section 31 of CGST/SGST Act a registered taxable person shall issue a tax invoice showing description, quantity and value of goods, tax charged thereon and other prescribed particulars, before or at the time of

removal of goods for supply to the recipient, where supply involves movement of goods or

delivery of goods or making available thereof to the recipient in other cases.

What is the time period within which invoice has to be issued for supply of Services

Ans. As per Section 31 of CGST/SGST Act a registered person shall, before or after the provision of service, but within a period of 30 days from the date of supply of service, issue a tax invoice showing description, value of goods, tax payable thereon and other prescribed particulars. For Banking and Insurance companies, this period is 45 days. For inter-state self-supplies made by bank, insurance and telecom companies, invoices can be issued before or at the time such supplier records the same in his books of account or before the expiry of the quarter during which the supply was made. Further a registered person liable to pay tax on reverse charge basis is also required to issue invoice on the date of receipt of goods or services or both.

What is the time period within which invoice has to be issued in a case involving continuous supply of goods

Ans. In case of continuous supply of  goods,  where successive statements of accounts or successive payments are involved, the invoice shall be issued before or at the time each such statement is issued or, as the case may be, each such payment is received.

What is the time period within which invoice has to be issued in a case involving continuous supply of services

Ans. In case of continuous supply of services,

where the due date of payment is ascertainable from the contract, the invoice shall be issued on or before due date of payment.;

where the due date of payment is not ascertainable from the contract, the invoice shall be issued before or at the time when the supplier of service receives the payment.;

where the payment is linked to the completion of an event, the invoice shall be issued on or before the date of completion of that event.

What is the time period within which invoice has to be issued where the goods being sent or taken on approval for sale

Ans. The invoice in respect of goods sent or taken on approval for sale or return shall be issued before or at the time of supply or six months from the date of removal, whichever is earlier.

What is the time of supply in respect of supply by an associate enterprise, located outside India

Ans.  An  associated enterprise  is defined  in  section 2(12) of the CGST Act, 2017 as having same meaning as assigned in section 92A of the Income-tax Act, 1961. An enterprise which participates, either directly or indirectly, through one or more intermediaries, in the management, or control or capital of the other enterprise is an associated enterprise.

In the context of GST, associated enterprise is particularly relevant in the case of supply of services, where the supplier is located outside India. In such cases, the time of supply will be the earlier of date of entry in the books of account of the recipient of supply or the date of payment thus, the levy under GST is attracted once such book entries are made even if no actual payment takes place or no invoice is issued. (Second proviso to section 13(3) of CGST Act, 2017)

What is the time of supply in case of continuous supply of services

Ans. There is no separate provision for time of supply in respect of continuous supply of services. The time of supply will be the date by which the invoice is actually issued or is required to be issued under section 31 of the CGST Act, 2017 or the date of receipt of payment (earlier of entry in books of account / credit in bank account), whichever is earlier.

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