How to determine the time of supply of goods and services under GST?

Introduction

It is necessary to know the date on which the tax liability arises, i.e. the date on which the charging event happened, to determine and discharge tax liability. It is referred to as the Time of Supply under GST law. The GST Registration provides different provisions for determining the time of the supply of goods and services. The provisions for the time of supply of goods and services are covered under Sections 12, Sections 13, and Section 14 of the CGST Act, 2017. The time of supply is usually the earliest of the three events, namely issuing an invoice, receiving payment, or completing the service. However, depending on the details of the transaction, the time of supply may sometimes differ. In this blog, we will discuss different methods to determine the time of supply of goods and services under GST.

Three events to determine the time of supply

From the following 3 events whichever is earlier can be determined as the date for the time of supply of goods and services under GST law. The events are as follows:

• Issuing an invoice: According to Section 31 of the CGST Act, 2017 when the supply involves the movement of goods, an invoice for the supply of goods must be issued before or at the time of removal of goods for supply to the recipient. However, in some cases, an invoice must be issued before or at the time of delivery of goods or while making goods available to the recipient. An invoice for the supply of services must be issued similarly before or after the service is rendered, but not later than thirty days from the date of service.

• Receiving payment: The phrase “the date on which the supplier receives the money” or “the date of receipt of payment” refers to the date on which the payment is entered into the books of accounts of the business or credited to his bank account, whichever is earlier.

• Completing the services: This means that when the services are completed, it can be referred to as the date of time of supply of goods and services.

Different methods to calculate the time of supply of goods and services

1. Time of supply of goods under GST: The earlier of the following dates shall be the time of supply of goods:

• The date on which the supplier is issuing an invoice. If the invoice is not issued, the latest date on which the provider is legally required to issue the invoice in relation to the supply.
• Date when the supplier receives the payment.

2. Time of supply of services under GST law: As per the provision Section 31 of CGST Act, 2017 a registered person supplying taxable services, then the time of supply of services under GST shall be before or after the provision of services but not beyond 30 days (in the case of banks and financial institutions within 45 days) from the date of supply of service or shall date of issuing an invoice.

3. Time of supply of goods and services for the reverse charge under GST: The earliest of the following dates will be considered to be the time of supply for goods and services for which tax is paid on a reverse-charge basis:

• When goods are supplied, the date of receipt of the goods; or
• The date on which the payment is debited from the bank account of the recipient or the date on which it is recorded in his books of accounts, whichever is earlier; or
• The day immediately after 30 days (in case of goods) and 60 days (in case of services) from the date of issuing an invoice by the supplier.

Note: When it is impossible to determine the time of supply as described above, the data entered in the books of accounts of the recipients shall serve as the time of supply.

4. Time of supply of goods and services for vouchers under GST law: The CGST Act, 2017 defines a voucher as an instrument with an obligation to accept it in exchange for the supply of goods, services, or both, and where the goods, services, or both to be supplied or the names of their potential suppliers are either indicated on the instrument itself or in related documentation, such as the terms and conditions of use of such an instrument. In the case of vouchers, the time of supply is:

• In the case of a single-purpose voucher, the date of issuance of the voucher acts as the time of supply because the supply was visible at the moment the voucher was issued.
• However, the period of supply is the day on which the voucher is redeemed in all other cases of supply of vouchers.

5. Time of supply of goods and services for residual provisions under GST: If none of the methods described above can determine the time of supply, the time of supply will be decided as under:

• When a periodical return must be filed, the date on which such return must be filed.

• In all other cases, be the date on which tax is paid.

Conclusion

The “time of supply” is determined by a variety of parameters under GST law. The numerous events for the time of supply of goods and services, such as issuing an invoice, making a payment in the case of supplying goods or services, or completing an event in the case of supplying services indicate that the Government wants to assure that the tax is collected as soon as possible. It is all governed by CGST Act, 2017.