Time of Supply under GST, Principles of Time of Supply under GST Law. Point of taxation means the point in time when goods have been deemed to be supplied or services have been deemed to be provided. The point of taxation enables us to determine the rate of tax, value, and due dates for payment of taxes. Under GST the point of taxation , i.e., the liability to pay CGST / SGST, arises at the time of supply as determined for goods and services. CGST Act,2017 states provisions to determine time of supply of goods under section 12 and time of supply of services under section 13 of the Act.
An attempt has been made in this Article to decipher the provisions of ‘Time of Supply’ under the CGST Bill, 2017 [Applicable to UTGST vide Clause 21 of the UTGST Bill, 2017 and to IGST vide Clause 20 of the IGST Bill, 2017], in a lucid manner for easy understanding. Complete Details for Time of Supply Under GST Act 2017, Time of supply of services under reverse charges, Details for Time of-supply of services under normal charges etc. Now check more details from below...
Time of Supply under GST, Principles of Time of Supply
Introduction
In GST regime, the tax collection event will be earliest of certain dates analysed in the following paras. The various events like issuing invoice/ making payment in case of supply of goods/ services or completion of event-in case of supply of service triggering the tax levy, confirms that the Government wants to ensure tax is collected at the earliest point of time.
This will be altogether a new concept for the current VAT and Central Excise taxpayers.
There are multiple parameters in determining ‘time’ of supply. Thus, businesses will face a huge challenge in maintaining records while reconciling between revenue as per financials and as per GST.
Principles of Time of Supply for Goods and/or Services [Clause 12 to 14 of the CGST Bill, 2017]
The taxable event under the GST regime shall be ‘supply’ of goods and/or services. However, the time of supply when the liability to pay CGST/ SGST (Intra-state) or IGST (inter-state) on goods and/or services arises, shall be determined in the following manner:
I General Provision
The time of supply of goods and services shall be determined as under:
| Time of supply for goods [Clause 12(2)] |
Time of supply for services [Clause 13(2)] |
| Earliest of the following: |
Earliest of the following: |
| a) Date of issue of invoice by the supplier or the last date on which he is required, to issue the invoice [under Clause 31(1)] with respect to the supply |
a) Invoice issued within prescribed time period [under Clause 31(2)]- Date of issue of invoice by the supplier, or the date of receipt of payment, whichever is earlier; or |
| b) Date on which the supplier receives the payment with respect to the supply |
b) Invoice not issued within prescribed time period [under Clause 31(2)] - Date of provision of service, or the date of receipt of payment, whichever is earlier; or |
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c) Other - Date on which the recipient shows the receipt of services in his books of account |
As regards the time of supply of goods, the Government (on the Councils’ recommendation) is yet to notify the categories of goods or supplies in respect of which a tax invoice is mandatorily required to be issued.
It is important to note here that unlike services, where Service Tax is payable on accrual basis, applicability of tax on advance payment received is going to be a new phenomenon for goods taxability in GST. GST would be payable on advance amount received in respect of both goods and services provided such advance is linked to the supply of goods and/or services
Further, insertion of a provision relating to date of entry in books of account of recipient as one of the parameters to determine time of supply for services is bound to create litigation as it is not possible for an assessee to identify the date on which recipient of services shows the receipt in his books of account.
Provisions for raising invoice:
| Supply of goods [as per Clause 31(1)] |
Supply of services [as per Clause 31(2)] |
| Before or at the time of,- |
Before or after the provision of service but within a period prescribed [i.e. 30 days in all cases/45 days in case of banking and financial institution from the date of supply of services] |
| (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 |
Where amount up to Rs 1,000/- is received in excess of amount indicated in an invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice.
Supply under Reverse Charge Mechanism ("RCM")
The time of supply of goods and services shall be determined as under:
| Time of supply for goods [Clause 12(3)] |
Time of supply for services [Clause 13(3)] |
Earliest of the following:
- (a) Date of receipt of goods, or
- (b) Date of payment as entered in the books of account of the recipient or the date on which the payment is debited to his bank account, whichever is earlier, or
- (c) Date immediately following 30 days from the date of issue of invoice/any other document by the supplier
|
Earliest of the following:
- (a) Date of payment as entered in the books of account of the recipient or the date on which the payment is debited to his bank account, whichever is earlier, or
- (b) Date immediately following 60 days from the date of issue of invoice/ any other document by the supplier
|
| Where it is not possible to determine the time of supply under the above clauses, the time of supply shall be the date of entry in the books of account of the recipient of supply |
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In case of associated enterprise: 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 or the date of payment, whichever is earlier |
Supply of Vouchers [Clause 12(4) and Clause 13(4)]
In case of supply of vouchers, by whatever name called, by a supplier, the time of supply for goods and services shall be:
- (a) Date of issue of voucher, if the supply is identifiable at that point; or
- (b) Date of redemption of voucher, in all other cases.
Residuary provision [Clause 12(5) and Clause 13(5)]
Where it is not possible to determine time of supply under the above provisions, time of supply for goods and services shall be
- (a) In a case where a periodical return has to be filed-Date on which such return is to be filed
- (b) In any other case-Date on which the CGST/ SGST or IGST is paid
In case of addition in value of supply by way of interest, late fee or penalty for delayed payment of consideration [Clause 12(6) and Clause 13(6)]
The time of supply 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 any consideration shall be the date on which the supplier receives such addition in value.
The time of supply 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 any consideration shall be the date on which the supplier receives such addition in value.
Change in the Rate of Tax in Respect of Supply of Goods or Services
Here, the provisions provided under the GST Law are drawn on similar line as existing Rule 4 of the Point of Taxation Rules, 2011 (“POTR”). In other words, determination of rate of tax depends upon three important events viz.:
- Date of supply of goods or services,
- Date of invoice; and
- Date of receipt of payment.
Thus, the rate of tax would be the one prevailing when two out of three events occur either prior to or after the date of change in rate of tax.
Continuous Supply of Goods // Services and Goods Sent on Approval
There are no express provisions relating to determination of time of supply in case of continuous supply of goods and/or services and in respect of goods sent on approval basis. One can thus, safely infer, that the above methods of determining the time of supply would equally apply to ‘continuous supply’ and goods sent on approval as well.
Conclusion
Most provisions are borrowed from the present Point of Taxation Rules, 2011 under the Service tax laws, with some modifications. Determination of the time of supply provisions under forward charge for goods has been mainly limited to the following two parameters:
- Date of issue of invoice or the last date on which the invoice is required to be issued
- Date of receipt of payment
For services, the parameters are drawn on similar line as existing Service tax provisions with additional aspect of entry in books of accounts of recipient as one of the parameters.
However, still no provision is provided in the CGST Bill to determine the time of supply where goods or services becomes taxable for the first time under GST regime as provided under Section 67A of the Finance Act, 1994 read with Rule 5 of the Point of Taxation Rules, 2011.
In essence, ascertaining the 'time of supply' is crucial for the purpose of determining the taxable event and payment of taxes.
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