5.

1 | P a g e Chapter-5 TIME OF SUPPLY

Introduction
Point of Taxation (POT) refers to the point in time when tax is required to be paid. This is a mechanism which
is used to determine the point in time when the tax liability will arise.
Under the old indirect tax regime, the point of taxation is different for each of the tax type.

Scenario Type of Tax Point of Taxation

Manufacturing Central Excise Incidence of excise duty arises on the manufacture of goods in
India, and the liability to pay excise duty arises at the time of
of Goods
removal of the excisable goods from the excise unit. For example,
Goods manufactured on 28th April, 2016 and removed from the
excise unit for sale on 5th May,2016. The liability of excise will arise
on 5th May, 2016.
Rendering of Service Tax Broadly, the time for payment of tax will be the earliest of (a)
Services date of receipt of payment or (b) date of issue of invoice.
Sale of Goods VAT/CST VAT/CST, as the case may be, on intrastate and interstate
transactions arises on the sale of goods.
Under GST, the taxable event is ‘Supply’ of goods and services. The point in time when goods or services
are supplied will be determined in terms of ‘Time of Supply’ provisions

Let us understand ‘Time of Supply of Goods’ under GST on Forward Charge [Section 12(2)]
The liability of GST (CGST and SGST or IGST, as applicable) will arise as shown below:
Earliest of the following
Date of invoice The date on which the supplier issues the invoice.
Receipt of payment The date on which supplier receives the payment with respect to the
supply.
“the date on which supplier receives the payment” means the date on
which payment is accounted in the books of accounts of the recipient or
the date on which payment is credited to his bank account. Whichever is
earlier.
Due date to issue The last date on which the supplier is required to issue the invoice [under
invoice Section 31(1)] with respect to the supply of goods.

Provisions for raising invoice for supply of goods [Section 31(1)]

Situations Time limit for raise the Invoice
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Movement of goods movement of goods involved in supply than before or at the time of
removal of goods.

Other than movement no movement of goods involved in supply than before or at the time of
of goods delivery of goods or making available to the recipient.

Continuous supply of If continuous supply of goods For Example, Supply of Oil etc. than earliest of
goods the following:
♦ Time when each statement is issued.
♦ Time when each payment is received.
Sale on approval basis If goods sent for approval than earliest of the following:
♦ Time when it becomes known that supply is taken place.
♦ Six month from the date of removal.

Let us understand this with examples.

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Point to be noted:-
GST if advance upto Rs 1,000 received can be paid at the time of issue of invoice - Where the supplier of
taxable goods receives an amount up to one thousand rupees in excess of the amount indicated in the tax
invoice, the time of supply to the extent of such excess shall, at the option of the said supplier, be the date
of issue of invoice - proviso to section 12(1) of CGST Act.
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Thus, if advance upto Rs 1,000 is received, GST is not payable at that stage. In that case, GST will be
payable when invoice is raised.
Example:-
If a supplier of goods has received an amount of ` 1500/- against an invoice of ` 1,100/- on 25.07.17 and the
date of invoice of next supply to the said recipient is 14.08.17.
Find the following in respect of excess amount over and above invoice value:
(a) Time of Supply of goods
(b) Due date of payment of tax.
Answer
(a) Since, excess amount received over and above invoice value not exceeds ` 1,000, supplier has an
option to treat the time of supply w.r.t ` 400/- either as 25.07.17 or 14.08.17.
(b) Due date of payment of tax
• If Time of Supply = 25.07.2017, then due date is 20.8.2017
• If Time of Supply = 14.08.2017, then due date is 20.9.2017

*Note: GST is not applicable to advances in case of supply of goods under GST except composition
dealer. GST on Advance is payable at the time of issue of the invoice. Notification No. 66/2017 – Central
Tax issued on 15.11.2017 (Applicable from Nov. 18 Exam)

Let us understand time of supply for goods under Reverse Charge Mechanism [Section 12(3)]
The liability of GST (CGST and SGST or IGST as applicable) will arise as shown below:

Earliest of the following

Date of Receipt of Goods The date on which the goods are received by the recipient.
Date of Payment The date on which supplier receives the payment with respect to
the supply.
“the date on which supplier receives the payment” means the date
on which payment is accounted in the books of accounts of the
recipient or the date on which payment is credited to his bank
account. Whichever is earlier.
30 Days from Date of Invoice The date immediately following 30 days from the date of issue of
invoice/any other document by the supplier
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Let us understand with examples.

Let us understand Time of Supply of Vouchers Exchangable for goods under GST on Forward Charge basis
[Section 12(4)]
As per section 12(4), the time of supply of vouchers exchangeable for goods is-
Date of issue of the voucher, if the supply that it covers is identifiable at that point, or
Date of redemption of the voucher in other cases.

Example
Acmesales Limited sells food coupons to a company, which gives these to its employees as part of the agreed perquisites. The
coupons can be redeemed for purchase of any item of food /provisions in the outlets that are part of the program.
As the supply against which the coupon will be redeemed is not known on the date of the sale of the coupon, the time of
supply of the coupon will be the date on which the employee redeems it against food / provision items of his choice.
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Example
With each purchase of a large pizza during the Christmas week from Perfect Pizza, one can buy a voucher for Rs. 20 which will
be redeemable till 5 Jan for a small pizza.
As the supply against which the voucher will be redeemed is known on the date of the sale, the time of supply is the date of
issue of the voucher.

Let us understand Time of Supply of goods under Residual case under GST on Forward Charge basis
[Section 12(5)]
If the situation is not covered by any of the provisions discussed above, the time of supply is fixed under sub-section (5) of
section 12, in the following manner:

 Where a Periodical return is required to be filed - Due date of filing such return, or
 In any other case - Date on which GST is paid.

Example
An Investigation team detect illegal removal of goods by a supplier who is not registered under GST. The
evidence is in the form of noting, often undated, and some corroborative material. The supplier voluntarily
pays tax during the investigation, to close the case. The time of supply will be the date on which the tax is
paid, as being unregistered, the supplier is not required to file periodical returns.

Enhancement in value on account of interest/late fee etc. for delayed payment of consideration [Section
12(6)]
Commercially, all the contract of supplies stipulate payment of interest/late fee/penalty etc. for payment
of consideration beyond the agreed time period.
Such interest etc. is includible in value of taxable supply So, the question arises as to when would the liability
to pay GST arise in such cases of addition in value.
Section 12(6) prescribes that time of supply in case of addition in value by way of interest/ late fee/penalty
for delayed payment of consideration for goods is the date on which the supplier receives such addition in
value.
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Example
Mr. X being a supplier receives consideration in the month of September 2017, instead of due date of July
2017, and for such delay he is eligible to receive an interest amount of Rs. 1000/- and the said amount is
received on 15.12.2017.
Find the time of supply for the interest portion and due date of payment.
Answer:
The time of supply = 15.12.17
i.e. the date on which it is received by the supplier and
Due date of tax liability = 20.01.18.

Let us understand Time of Supply for Services under GST on Forward Charge basis [Section13(2)]
The liability of GST (CGST and SGST or IGST, as applicable) will arise as shown below:

Situation 1:- If the invoice is issued within the time Situation 2:- If the invoice is not issued within the time
period prescribed under section 31(2) of the CGST period prescribed period under section 31(2) of the CGST
Act, i.e. Invoice issued ≤ 30 Days from supply of Act, the time of supply of services shall be the earliest of
service Sec 31(2) In case of Banking/ NBFC/Insurer ≤ the following:.
45 Days
the time of supply of services shall be the earliest of
the following:
(a) Date of issue of invoice; or (a) Date of provision of service; or
.
(b) Date when the payment entry in relation to (b) Date when the payment entry in relation to supply of
supply of services is recorded in books of accounts of services is recorded in books of accounts of the supplier; or
the supplier; or

(c) Date on which the payment is credited to (c) Date on which the payment is credited to supplier’s
supplier’s bank account bank account.
Situation 3 :- When the above events (i.e. Situation 1 & Situation 2) are unascertainable

Provisions for raising invoice for supply of services [Section 31(2),(5), (6) with rule 47]
Situations Time limit for raise the Invoice
in case of insurance The tax invoice needs to be issued either before the provision of service or
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companies/ banking within 45 days from the date of supply of service.

companies/ financial
institutions
including NBFCs
Other than case of The tax invoice needs to be issued either before the provision of service or
insurance companies/ within 30 days from the date of supply of service.
banking companies/
financial institutions
including NBFCs

In case of continuous
supply of services Where the due date of The invoice shall be issued on or before
[Section 31(5)] payment is ascertainable the due date of payment;
from the contract For example, telecom service provider
sends telephone bill every month. This is
mentioned in the contract with the
telecom company.
Where the due date of The invoice shall be issued before or at
payment is not ascertainable the time when the supplier of service
from the contract receives the payment;

Where payment is linked to The invoice shall be issued on or before

the completion of an event the date of completion of that event.

In a case where the supply of services ceases under a contract before the
Cessation of services completion of the supply, the invoice shall be issued at the time when the
supply ceases and such invoice shall be issued to the extent of the supply
[Section 31(6)] made before such cessation.
For example, a works contract starting on 1st August 2017 was due for
completion in March 2018. But it was stopped on 11th Nov 2017. The
contractor will issue an invoice on 11th November 2017 to the extent of
work performed.
taxable supplies In case of
between distinct o Insurance companies
persons as specified in o Banking companies
section 25 o Financial institutions including NBFCs
o Telecom companies
o Notified supplier of services
making taxable supplies between distinct persons as specified in section
25, invoice may be issued before or at the time of recording such supply in
the books of account or before the expiry of the quarter during which the
supply was made.

Point to be noted:-
1. Excess payment upto Rs. 1000: Option of taking invoice date as time of supply
In terms of the proviso to sub-section (2) of section 13, if payment received is up to Rs. 1,000 in excess of the
invoice value, the supplier can choose to take the related invoice date as the time of supply in relation to
this excess value.
Example: - A telephone company receives ` 5000 against an invoice of Rs. 4800. The excess amount of Rs.
200 can be adjusted against the next invoice.
The company has the option to take the date of the next invoice as the time of supply of service in relation
to the amount of Rs. 200 received in excess against the earlier invoice.
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Let us understand this with examples.

Date of Date of Time of Explanation

Invoice Receipt of Supply
Payment
20th October, 10th 20th October, In this case, the date of invoice is earlier than the date of
2017 November, 2017 receipt of payment. Hence, The time of supply will be
2017 20th October, 2017.
5th 25th 25th In this case, the date of receipt of payment (advance
December, November, November, receipt) is earlier than the date of invoice. Hence, the
2017 2017 2017 time of supply will be 25th November, 2017
5th Date of Entry 20th The time of supply will be the earliest of date of invoice or
December, in Books: 20th November, receipt of payment. The date of receipt of payment will
2017 November, 2017 be the earliest of:
2017
Date of  The date on which the payment is entered in the
Payment books of accounts or
credited to  The date on which the payment is credited to
Bank: 25th the bank account.
November,
2017 In this case, the date on which the receipt of payment is
entered in the books of account is earlier than the date
on which payment is credited to the bank account.
5th Date of Entry 10th The time of supply will be the earliest of date of invoice or
December, in Books: 15th November, receipt of payment. The date of receipt of payment will
2017 November, 2017 be the earliest of:
2017
Date of  The date on which the payment is entered in the
Payment books of accounts or
credited to
 The date on which the payment is credited to
Bank: 10th
the bank account.
November,
2017
In this case, the date on which payment is credited to the
bank account is earlier than the date on which payment
is entered in the books of account.
Time of supply in cases where invoice is not available

Date of Receipt of Time of Supply Explanation

Completion of Payment of Services
Service
1st November, 5th December, 1st November, The time of supply will be the earliest of Date of
2017 2017 2017 Completion of Services and receipt of payment.
Hence, the time of supply will be 1st November,
2017. This is because the date of completion of
services is earlier than the date of receipt of
payment.
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Let us understand time of supply for services under Reverse Charge Mechanism Section 13(3)
The liability of GST (CGST and SGST or IGST as applicable) will arise as shown below:

Earliest of the following

Date of payment Earliest of date of payment entered in books of accounts or the date on which payment is
credited to the bank accounts
61 days from In case payment is not made by recipient to service provider within 60 days, the time of
issue of invoice supply will the date immediately following the expiry of 60 days.
of supplier

Let us understand this with examples.

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Date of Date of Time of Explanation

Invoice Payment Supply of
services
20th July, 10th August, 10th August, The date of payment is earlier than 60 days from date of
2017 2017 2017 invoice. Hence time of supply will be 10th August, 2017.
1st July, 2017 10th 30th August, In this case, 60 days from date of invoice is earlier than
September, 2017 the date of payment. Hence time of supply will be
2017 30th August, 2017.

Import of services between associated enterprises

In the case of service received from an associated enterprise located outside India, the time of supply will
be
(a) the date of entry in the books of account of the receiver
OR
(b) The date of payment
-whichever is earlier

Example :
X Ltd. & Y Ltd. (London) is associated enterprises. X Ltd., a registered firm received the services of Y Ltd., a
unregistered firm. Determine the time of supply in following cases:
(i) X Ltd. recorded the liability in the books on 15th July 2017 and payment will be made in the next month.
(ii) X Ltd. made advance payment to Y Ltd. on 10th July and recorded liability in the books on 15th Aug
2017.
Answer:
(i) Time of supply =15-07-2017
Note: as the date of entry in the books is prior to the date of payment.
(ii) Time of supply = 10-07-2017
Note: as the payment is made earlier to the date of entry in the books.
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Let us understand Time of Supply of Vouchers Exchangable for Servicess under GST on Forward Charge
basis [Section 13(4)]
As per section 13(4), the time of supply of vouchers exchangeable for Services is-
Date of issue of the voucher, if the supply that it covers is identifiable at that point, or
Date of redemption of the voucher in other cases.
Let us understand Time of Supply of Servicess under Residual case under GST on Forward Charge basis
[Section 13(5)]
If the situation is not covered by any of the provisions discussed above, the time of supply is fixed under sub-
section (5) of section 13, in the following manner:
 Where a Periodical return is required to be filed - Due date of filing such return, or
 In any other case - Date on which GST is paid.

Enhancement in value on account of interest/late fee etc. for delayed payment

of consideration [Section 13(6)]
Section 13(6) prescribes that time of supply in case of addition in value by way of interest/ late fee/penalty
for delayed payment of consideration for a service is the date on which the supplier receives such addition
in value.

Time of Supply in case of Change in Rate of Tax [Section 14]

In case of change in rate of tax, determination of rate of tax depends upon three events namely,-
 Date of supply of goods or services,
 Date of invoice; and
 Date of receipt of payment
If any two of the above events occur before the change of rate, the time of supply is before the change of
rate. If any two of them occur after the change of rate, the time of supply is after the change of rate and
the new rate becomes applicable to the supply. Using this principle, time of supply, in case of change in
rate of tax, can be determined as under:
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Rate of Tax before 01.08.2017 was 18% and has been reduced to 12% w.e.f 01.08.2017

Date of crediting of payment in bank account to be the “date of receipt of payment”

if such crediting takes place after 4 working days of change in rate of tax
Normally the date of receipt of payment is the date of credit in the bank account of the recipient of
payment or the date on which the payment is entered into his books of account, whichever is earlier.
However, in cases of change in rate of tax, the date of receipt of payment is the date of credit in the bank
account if such credit is after four working days from the date of change in rate of tax.
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Example :-
Rate of tax is changed on 10th July. Receipt of payment is recorded in the books of account of the supplier
on 8th July. The payment is credited in the supplier’s bank account on 15th July. The Bank was open all
days between 10th and 15th July. Here, the date of receipt of payment is 15th July.

Example :
Mr. X being a supplier receives consideration in the month of September 2017, instead of due date of July
2017, and for such delay he is eligible to receive an interest amount of Rs. 1000/- and the said amount is
received on 15.12.2017.
Find the time of supply for the interest portion and due date of payment.
Answer:
The time of supply = 15.12.17
i.e. the date on which it is received by the supplier and
Due date of tax liability = 20.01.18.