Time of Supply

• What is the time of supply under GST?
• Why is the time of supply important?
• How is the time of supply determined?
• Time of supply for taxable transactions under reverse charge
• Determining time of supply when none of the above methods apply
• Determining the time of supply when there is a change in the GST rate of the goods and services supplied

What is the time of supply under GST?

The time of supply for a transaction is the date on which taxes are levied upon the goods and services sold or transferred.

Why is the time of supply important?

The time of supply for a transaction determines when the taxes will be due and which return the transaction must be recorded on. This is especially important for transactions where the invoice date isn’t the same as the payment or delivery date.

How is the time of supply determined?

1. Time of Supply of Goods and/or Services

   • For transactions involving goods and services, the time of supply will be the earlier of the following dates:
     • Invoice date.
     • Payment date. (This is either the date on which the payment is recorded in the supplier’s books or the date the payment is credited to the supplier’s bank account, whichever is earlier.)
   • For example, suppose you purchased a bunch of goods in the month of July, and the supplier issued the invoice on the 18th of July. By agreement with the supplier, you make the payment several weeks later on the 12th of August, and the supplier records the transaction on their books the next day (the 13th of August). The time of supply for this transaction will be the earliest of all these dates, which is the 18th of July. 
   • Note: While making invoice payments, if a buyer pays an amount greater than the invoice amount (up to a maximum of Rs.1000 over the invoice amount), the time of supply for the excess amount is always the invoice date. It’s up to the supplier to decide if they should allow buyers to do this. Should the excess amount exceed Rs.1000, the seller must either refrain from collecting it or raise a separate invoice for the excess amount/advance collected).

2. Time of supply for vouchers

   • For transactions involving vouchers, the time of supply is either the issue date of the voucher (if this can be identified) or the date the voucher was cashed in.

Time of supply for taxable transactions under reverse charge

• Under the reverse charge mechanism, there are some purchases where the buyer must collect and pay the tax directly to the government on behalf of the supplier. 
• For these transactions, the time of supply is the earliest of the following dates:
  • Date the buyer receives the goods/services.
  • Date the buyer makes their payment. (This is either the date the buyer records the payment in their books or the date the payment is debited from the buyer’s bank account, whichever is earlier.)
• In the case of goods, it is the 31st day after the invoice issue date. In the case of services, it will be the 61st day after the invoice issue date.
• If all the above conditions do not apply (for instance, where the supplier is located outside India) then the time of supply is the date on which the buyer entered the transaction into their books.

Determining time of supply when none of the above methods apply

• If all above methods are unable to help a tax payer determine the time of supply for a particular transaction, then according to residuary provisions under section 12(5) for goods and section 13(5) for services, it will be the earlier of the following dates: 
  • Date on which the next monthly or quarterly return has to be filed.
  • Date on which the taxpayer paid CGST/SGST for the transaction.

Determining the time of supply when there is a change in the GST rate of the goods and services supplied

According to Section 14, the time of supply for a transaction, where there is a change in the GST rate of goods and services supplied during the course of the same is as follows:

1. | Before the change in GST rate | After the change | After the change | TOS = Invoice issue date or payment collection date, whichever is the earliest of the two | New GST rate
2. | Before the change in GST rate | Before the change | After the change | TOS = Invoice issue date | Old GST rate
3. | Before the change in GST rate | After the change | Before the change | TOS = Payment collection date | Old GST rate
4. | After the change in GST rate | Before the change | Before the change | TOS = Invoice issue date or Payment collection date, whichever is the earliest of the two | Old GST rate
5. | After the change in GST rate | Before the change | After the change | TOS = Payment collection date | New GST rate
6. | After the change in GST rate | After the change | Before the change | TOS = Invoice issue date | New GST rate