ACCOUNTING & TAXATION:

Concept of Time of Supply under GST

GST is payable on supply of goods or services. A supply consists of elements that can be separated in time, like purchase order / agreement, despatch (of goods), delivery (of goods) or provision or performance of service, entry in the records, payment, and entry of the payment in the records or deposit in the bank.

So, at which of points of time will GST become payable?

The CGST Act provides separate provisions for time of supply for goods and services vide sections 12 and 13 of CGST Act. Section 14 provides for the method of determining the time of supply in case there is a change in the rate of tax on supply of goods or services. Sections 12 and 13 use the provisions of section 31 relating to issue of tax invoice as a reference point.

DATE OF ISSUE OF INVOICE BY SUPPLIER OF GOODS OR SERVICES (relevant extract of sec. 31)

1. In case of Supply of Goods: –

As per Sec 31 a registered person supplying taxable goods shall, before or at the time of: –

(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or

(b) delivery of goods or making available thereof to the recipient, in any other case shall issue the invoice.

2. In case of Supply of Services: –

As per Sec 31 a registered person supplying taxable services shall, before or after the provision of service: – but not beyond 30 days (in case of banks or financial institution within 45 days) from the date of supply of service shall issue the invoice.

SEC 12:-TIME OF SUPPLY OF GOODS

1. The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section.
2. The time of supply of goods shall be the earlier of the following dates, namely

(a) the date of issue of invoice by the supplier or the last date on which he is required to issue the invoice with respect to the supply, Or

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

Proviso: –

TOS in case of excess amount is received upto Rs. 1,000/- of the amount indicated in the tax invoice, at the option of the said supplier be the date of issue of invoice in respect of such excess amount.

As per Notification No. 66/2017 dated 15 Nov, 2017, all taxpayers are exempted from paying GST at the time of receipt of advances in relation to supply of goods. Thus, TOS in case of supply of goods will only be determined according to point (a) above.

3. TOS FOR GOODS IN CASE OFREVERSE CHARGE: –

In case of supplies in respect of which tax is paid or payable in respect of Reverse Charge, TOS shall be the earliest of the following dates,

(a) the date of receipt of goods, or

(b) the date of payment as entered in the books of accounts of the recipient or the date on which the payment is debited in his books of accounts, whichever is earlier, or

(c) the date immediately following thirty days from the date of issue of invoice or any other documents, by whatever name called, in lieu thereof by the supplier.

Proviso: –provided that where it is not possible to determine the TOS under clause (a) or (b) or (c), TOS shall be the date of entry in the books of account of the recipient of supply.

4. TOS IN CASE OF VOUCHER: –

In case of supply of voucher by a supplier, the TOS shall be: –

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

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

5. TOS IN CASE OF RESIDUAL CASE: –

Where it is not possible to determine the TOS according to above mentioned points, TOS shall be: –

(a) in case where a periodical return has to be filed, be the date on which such return is to be filed; or

(b) in any other case, be the date on which the tax is paid.

6. The TOS to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of consideration shall be the date on which the supplier receives such addition in value.

SEC 13: -TIME OF SUPPLY OF SERVICES

1. The liability to pay taxes on services shall arise at the time of supply, as determined in accordance with the provisions of this section.
2. TOS FOR NORMAL CHARGE: –The TOS of services shall be the earliest of the following dates, namely: –

(a) if the invoice is issued within the period prescribed under Sec 31: –

• The date of issue of invoice by the supplier, or
• The date of receipt of payment, whichever is earlier.

(b) if the invoice is not issued within the period prescribed under Sec 31: –

• The date of provision of service, or
• The date of receipt of payment, whichever is earlier.

(c) In case where the provisions of clause (a) or (b) do not apply: –

• The date on which recipient shows the receipt of services in his books of account.

Proviso: –

TOS in case of excess amount is received upto Rs.1,000/- of the amount indicated in the tax invoice, at the option of the said supplier be the date of issue of invoice in respect of such excess amount.

3. TOS FOR SERVICE IN CASE OF REVERSE CHARGE: –

In case of supplies in respect of which tax is paid or liable to be paid on Reverse charge basis, TOS shall be earliest of the following dates, namely: –

(a) the date of payment as entered in the books of account or the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or

(b) the date immediately following sixty days from the date of issue of invoice or any other documents, by whatever name be called, in lieu thereof by the supplier.

Proviso1: –provided that where it is not possible to determine TOS under clause (a) or (b), the TOS shall be the date of entry in the books of account of the recipient of supply.

 Proviso2: –Provided further that in case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment, whichever is earlier.

4. TOS IN CASE OF VOUCHER: –

In case of supply of voucher by a supplier, the TOS shall be: –

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

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

5. 5. TOS IN CASE OF RESIDUAL CASE: –

Where it is not possible to determine the TOS according to above mentioned points, TOS shall be: –

(a) in case where a periodical return has to be filed, be the date on which such return is to be filed; or

(b) in any other case, be the date on which the tax is paid.

6. The TOS to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of consideration shall be the date on which the supplier receives such addition in value.