Understanding Goods and Services Tax (GST) Time of Supply

Goods and Services Tax (GST) time of supply, also known as TOS, determines when GST becomes payable on a supply. This includes various elements like agreement to supply, delivery of goods, provision of services, invoice issuance, payment, and recording of payments. The time of supply for goods and services is governed by specific sections under forward charge and reverse charge mechanisms. Understanding the time of supply is crucial for complying with GST regulations.

• GST
• Time of Supply
• Goods and Services Tax
• TOS
• Commerce

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1. Goods & Services Tax Time of Supply HARMANPREET KAUR ASSISTANT PROFESSOR DEPARTMENT OF COMMERCE SHIVAJI COLLEGE

2. TIME OF SUPPLY (TOS) GST is payable on supply A supply consists of elements that can be separated in time like agreement to supply, delivery of goods, provision of services, issue of invoice, payment, and entry of the payment in the records or deposit in the bank. So, at which of these points of time does GST become payable ? TOS is Point in time when the liability to pay tax arises

3. TIME OF SUPPLY (TOS) TIME OF SUPPLY OF GOODS (SECTION 12) TIME OF SUPPLY OF SERVICES (SECTION 13) Under Forward charge Sec. 12 (2) Under Forward charge Sec. 13 (2) Under Reverse charge Sec. 13 (3) Under Reverse charge Sec. 12 (3) For exchangeable vouchers of goods Sec.13 (4) For exchangeable vouchers of goods Sec.12 (4) Residual cases Sec. 13 (5) Residual cases Sec. 12 (5)

4. Time of Supply of Goods Sec 12(2) Date of issue of invoice or Last date of issue of invoice under section 31* Whichever is earlier Date of receipt of payment (date on which payment is entered in the books of Accounts of supplier or Date on which payment is credited to the supplier s bank a/c whichever is earlier)

5. Time of Supply of Goods *Time of issue of invoice in the case of Supply of Goods by the supplier [Section 31(1)]: Supply involves movement: Before or at the time of removal of goods for supply [31(1)(a)] Supply - Other cases: Before or at the time of Delivery of goods/ making available to the recipient or [31(1)(b)] Continuous Supply: before or at the time of issue of successive statement of account/receipt of payment [31(4)] Sale on approval basis: Earlier of a) Before/ at the time of supply* (*when the recipient indicates that he has accepted the supply of goods); OR b) 6 months from date of removal [31(7)]

6. Time of Supply of Goods Illustration The following data is noted from the records of X Ltd. (supplier) and Y Ltd. (recipient of goods). Determine the time of supply of goods from the given information. Question Solution Event Date of issue of invoice (Since issued within time limit u/s 31) Date 27-2-2020 Date of issue of invoice by the supplier 27-2-2020 Date of payment as entered in books of account i.e. 29-2-2020 ; or 28-2-2020 Date of removal of goods Date on which Payment is credited in the bank account i.e. 10-3-2020 ; whichever is earlier 29-2-2020 29-2-2020 Date when payment is entered in books of account DATE OF PAYMENT TIME OF SUPPLY as per Section 12(2) Earliest of the above 10-3-2020 Date on which payment is credited in bank account 27-2-2020

7. Time of Supply of Goods Sec 12(2) Excess payment of upto 1000/- is received in respect of any invoice Time of supply shall at option of the supplier is date of issue of invoice in respect of such excess amount. (Proviso to Sec 12(2)) No tax on advance received against the supply of goods As per Notification No. 40/2017- CT dated 13-10-2017, suppliers of goods having aggregate turnover of upto 1.50 crores in the last year or current year* have been exempted to pay tax upon receipt of advance (w.e.f 13-10-2017) as the time of supply in such cases would be the date of invoice or due date of issue of invoice in light of Clause (a) of Section 12(2). Subsequently this exemption has been extended w.e.f. 15-11-2017 to all tax payers vide Notification No 66/2017-CT dated 15-11-2107.

8. Time of Supply of Goods Sec 12(2) In summary, provisions regarding amount received in advance in respect of goods Period Taxability of amount received in advance Aggregate turnover of supplier 1.50 crores or less Aggregate turnover of supplier More than More than 1.50 crores 01.07.2017 to 12.10.2017 Taxable Taxable 13.10.2017 to 14.11.2017 Not taxable Taxable 15.11.2017 and onwards Not taxable Not taxable However, This benefit is not available to person covered under Composition Scheme, Reverse Charge mechanism and in the case of supply of services.

9. Time of Supply of Goods Sec 12(2) Due date of issue of invoice CASES Invoice date Date of Payment Time of supply Receipt of advance of 5 lakh 2-Jan-2019 30-Dec-2019 30-Nov-2019* 30-Dec-2019 Receipt of advance of 20 lakh 30-Dec-2019 2-Jan-2019 30-Dec-2019 29-Dec-19* Final payment 2-Jan-2019 30-Dec-2019 14-Jan-2020 30-Dec-2019 * w.e.f. 15-11-2017, TOS for supply of goods under forward charge shall be based upon the date of invoice or the last date on which supplier is required to issue invoice, whichever is earlier.

10. Time of Supply of Goods under Reverse Charge Sec 12(3) Date of receipt of goods Whichever is earlier Date of payment as entered in the books of Accounts of recipient or Date on which payment is debited in his bank a/c, whichever is earlier Date immediately following 30 days from date of issue of invoice or any other document Where it is not possible to determine time of supply in the above cases: Date of entry in the books of account of the recipient

11. Time of Supply of Goods Illustration The following data is noted from the records of X Ltd. (supplier) and Y Ltd. (recipient of goods covered under reverse charge mechanism). Determine the time of supply of goods from the given information. Question Solution Event Date of receipt of goods Date 12-8-2019 2-7-2019 Date of issue invoice by the supplier Date of payment as entered in books of account of recipient i.e. 1-9-2019 OR Date on which Payment is debited in the bank account of recipient i.e. 3-9-2019; whichever is earlier DATE OF PAYMENT Date immediately following 30 days from date of issue of invoice (i.e. 31st day) 1-9-2019 12-8-2019 Y Ltd. receives the goods, which were held up in transit Payment made for the goods and entered in books of recipient 1-9-2019 2-8-2019 3-9-2019 Payment is debited in the bank account of recipient Time of Supply as per Section 12(3) Earliest of the above 2-8-2019

12. Time of Supply of Services Sec 13(2) Clause (a) Clause (b) Clause (c) If invoice issued within prescribed time u/s 31 Date of issue of invoice Date of receipt of payment whichever is EARLIER If invoice not issued within prescribed time u/s 31 Date of provision (completion) of service or Date of receipt of payment whichever is EARLIER If both the clauses do not apply Date on which recipient shows the receipt of services in his books of accounts Where payment of 1000/- is received in excess, then time of supply for goods or services at the option of supplier is date of issue of invoice (Proviso to section 13(2)).

13. Time of Supply of Services *Time of issue of invoice in the case of Supply of Services by the supplier [Section 31(2)]: Tax invoice is to be issued before or after the provision of service, but within 30 days from the date of supply of services. In case of insurer/banking company/financial institutions/NBFCs, this limit is 45 days from the date of supply of services. Continuous Supply of Services Situation regarding due date of payment Invoice shall be issued On or before the due date of Payment Due date of payment is ascertainable from the contract Due date of payment is not ascertainable from the contract When payment is linked to completion of the event Before or at the time when the supplier of service receives the payment On or before the date of completion of that event. When services are terminated in between before the completion of supply- invoice should be issued at the time when supply ceases.

14. Time of Supply of Services Illustration The following data is noted from the records of X Ltd. (supplier) and Y Ltd. (recipient). Determine the time of supply of services from the given information. Question Solution Event Date of issue of invoice (Since issued within time limit u/s 31 .e. within 30 days from supply of service) Date 20-1-2020 20-1-2020 Date of issue of invoice by the supplier Date of payment as entered in books of account i.e. 18-1-2020 ; or 17-1-2020 Date of supply of service Date on which Payment is credited in the bank account i.e. 17-1-2020 ; whichever is earlier 17-1-2020 18-1-2020 Date when payment is entered in books of account DATE OF PAYMENT TIME OF SUPPLY as per Section 13(2) Earliest of the above 17-1-2020 17-1-2020 Date on which payment is credited in bank account

15. Time of Supply of Services under Reverse Charge Sec 13(3) Date of payment as entered in the books of Accounts of recipient or Date on which payment is debited in his bank a/c, whichever is earlier Whichever is earlier Date immediately following 60 days from date of issue of invoice or any other document Where it is not possible to determine time of supply in the above cases: Date of entry in the books of account of the recipient In case of import of services from an associated enterprises the time of supply is the date of entry in the books of account of recipient of supply OR date of payment, whichever is earlier.

16. Time of Supply of Services Illustration Mr. Parvesh supplied services to Mr. Pawan. The tax in respect of such services is payable by Mr. Pawan. Determine the time of supply of services from the given information. Question: Solution: Event Date Date of payment as entered in books of account of recipient i.e. 26-3-2020 OR 25-3-2020 14-3-2020 Date of issue invoice by the supplier Date on which Payment is debited in the bank account of recipient i.e. 25-3-2020; whichever is earlier Payment made for the goods and entered in books of Mr. Pawan 26-3-2020 DATE OF PAYMENT Date immediately following 60 days from date of issue of invoice (i.e. 61st day) 14-5-2020 Payment is debited in the bank account of Mr. Pawan 25-3-2020 Time of Supply as per Section 13(3) Earliest of the above 25-3-2020

17. Time of Supply of Vouchers Sec 12(4)/13(4) Date of issue If supply is identifiable at the point of issue of voucher Dateof redemption of voucher Other cases

18. Time of Supply of Vouchers Sec 12(4)/13(4) Illustrations Ms. Rhea gets voucher worth 5000 from Lakme cosmetics on 21.1.2020. Lakme cosmetics deals in various accessories and cosmetics for Ladies. The voucher may be redeemed for any items like nail polish, lipsticks, eye liner etc. She redeemed the voucher on 25.2.2020. In this case, TOS will be date of redemption since supply supply is is not issue of voucher. TIME TIME OF OF SUPPLY= Ms. Preeti gets a voucher worth 3000 on 21.2.2020 to avail the services of eyecheck up with Eye7 hospital. Preeti redeems the voucher on 10.3.2020. In this case, TIME TIME OF OF SUPPLY SUPPLY will issue of voucher since supply supply is is identifiable will be be 21 identifiable. 21. .2 2. .2020 2020, the date of not identifiable identifiable at the date of SUPPLY= 25 25. .02 02. .2020 2020

19. Time of Supply for Residual Cases Sec 12(5) / 13(5) Where it is not possible to determine the time of supply under any of the circumstances discussed, it shall be determined as: Where periodical return has to be filed Due date for filing of such return Any other case Date on which GST is paid

20. Time of Supply of Goods / Services: Value Addition Sec. 12(6) / 13(6) As per Section 15(2)(d) of CGST Act, this additional payment is included in the value of supply.

21. Time of Supply of Goods / Services: Value Addition Sec. 12(6) / 13(6) Example: M/s Kanishka supplies services to Mr. Gautam for 4, 70,000 on 25.11.2019 with credit period of 1 month. The invoice specifies an interest charge of 3000 in case the recipient fails to make the payment in specified time period. Mr. Gautam makes the payment of 4, 70,000 on 31.12.2019. Further, He pays the charges for late payment: interest of 3000 on 08.01.2020. TIME TIME OF of 3000. OF SUPPLY SUPPLY in respect of Addition Addition in in value value is is 08 08. .01 01. .2020 2020 i.e. Date on which supplier receives such addition in value

22. Change in rate of tax in respect of supply of goods or services Sec 14 Taxable supply has been provided Date of receipt of payment Date of issue of invoice Time of supply Rate of tax 1. Date of receipt of Payment Date of issue of invoice whichever is earlier 2. After After New Before Change in effective rate of tax Date of issue of invoice Before After Old Date of receipt of Payment After Before Old

23. Change in rate of tax in respect of supply of goods or services Sec 14 Taxable supply has been provided Date of receipt of payment Date of issue of invoice Time of supply Rate of tax Date of receipt of Payment Before After New After 1. Date of receipt of Payment Date of issue of invoice whichever is earlier Change in effective rate of tax 2. Before Before Old Date of issue of invoice After Before New

24. Change in rate of tax in respect of supply of goods or services Sec 14

25. References Babbar, Sonal, Kaur, Rasleen and Khurana, Kritika. Goods and Service Tax (GST) and Customs Law. Scholar Tech Press. Bansal, K. M., GST & Customs Law, Taxmann Publication. Central Board of Indirect taxes and Customs website http://cbic.gov.in/htdocs-cbec/gst/index-english Clear Tax website https://cleartax.in/s/gst-guide-introduction Singhania V. K , GST & Customs Lax, Taxmann Publication.

26. Thank You Practice unsolved questions for the book