Time of Supply

Point in time when the liability to pay tax arises?

A supply consists of elements that can be separated in time, like

purchase order/agreement
dispatch (of goods)
delivery (of goods)
provision or performance of service
entry in the records
payment
entry of the payment in the records
deposit in the bank.

The CGST Act provides separate provisions for time of supply for goods and
services vide sections 12 and 13 of CGST Act.
 Issue of Tax invoice

• As per section 31 of the CGST Act, an invoice for supply of goods needs to be
issued before or at the time of removal of goods for supply to the recipient,
where the supply involves movement of goods.
• However, in other cases, an invoice needs to be issued before or at the time of
delivery of goods or while making goods available to the recipient.
• Similarly an invoice for supply of services needs to be issued before or after the
provision of service but not later than 30 days (45 days in the case of Banking &
Financial Services) from the date of provision of service
• In case of continuous supply of goods, the invoice should be issued before or at
the time of issuance of periodical statement/receipt of periodical payment [Section
31(4)].
• In case of goods sent or taken on approval for sale or return, invoice should be
issued before or at the time of supply or 6 months from the date of removal,
whichever is earlier [Section 31(7)].
Time of supply of goods (Sec 12)
Different Situations: Determination of ToS
Supply of goods where supplier is liable to pay tax (Forward charge) Section 12(2)
Time of supply for payment of GST on
Advance
 Treatment of Advance Receipts

• In case of supply of services, if the advance is received before the

issue of the invoice, the time of supply would be the date of receipt of
advance .
• Thus taxpayer receiving advance must pay GST on the money
received.
• *Note: For the supply of goods, advance received is not subject to
GST. The entire amount will be taxed on the issue of the invoice
(w.e.f. 15th November 2017).
Answer: For the supply of goods, advance received is not subject to GST. The entire amount will be taxed on the issue of the invoice (w.e.f.
15th November 2017). Hence, GST on advance is not imposed in the month when it is received, but GST on advance is imposed in the month
when tax invoice is issued.
Forward Charge - Goods
Date of issue of invoice by the supplier of goods 23 Oct
Last date of issue of invoice under Section 31 20 Oct
The time of supply of th October which is the date on
Dategoods
on whichto the isextent
payment recordedof thebooks
in the of ofRs.12,00,000 is of20Not
account of the supplier Available
which the goods were
goods
made available to the recipient, it is the earlier of the dates
Date on which payment is credited to suppliers account 4 Nov
Earlier (ToS) 20 Oct (Rs.12,00,000 tax to be paid in
October month)
Reverse Charge - Goods
Date on which goods are received May 12
31st day from the issue of invoice by the supplier of goods June 4
Date on which payment is recorded in the books of the recipient of goods Not available
Date on which payment is debited from the bank account of recipient of goods May 30
Earlier (ToS) May 12
ANSWERReverse Charge - Goods
Date on which goods are received June 12
31st day from the issue of invoice by the supplier of goods June 4
Date on which payment is recorded in the books of the recipient of goods NA
Date on which payment is debited from the bank account of recipient of goods July 3
Earlier (ToS) June 4
 Time of Supply for Vouchers
• Acmesales Limited sells food coupons to a company. The company gives these
coupons to its employees as part of the agreed perquisites. The coupon 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.

• With each purchase of a large pizza on December 25 during the Christmas week
from Perfect Pizza, one can buy a voucher for Rs.20 which will be redeemable till
5th Jan for a small pizza.
As the supply against which the voucher will be redeemed is known on the date of
issue of the vouchers, the time of supply is the date of issue of the voucher i.e. Dec
25.
Vouchers [Section 12(4)]
Residual case [Section 12(5)]
 Enhancement in value on account of interest/late fee. For delayed payment
of consideration

• The time of supply in case of addition in value by way of interest/late fee/penalty for delayed payment
of consideration for good is the date on which the supplier receives such addition in value.
• Ex: Radha Traders sold goods worth Rs.1,00,000 to Shyam Sales on 6th June with a condition that
interest @2% per month will be charged if Shyam Sales failed to make payment within 15 days of the
delivery of the goods. Goods were delivered as also the invoice was issued on 6th June. Shyam Sales
paid the consideration for the goods on 6th July along with applicable interest. What is the time of supply
for goods sold and interest paid?
• Time of supply for the goods sold is the date of issue of invoice i.e. 6th June and the time of supply for
addition in value by way of interest is the date when such addition in value is received by Radha Traders
i.e. 6th July
• Interest to be charged: Rs.1,00,000*15/30*2% = Rs.1000
• Tax to be paid on Rs.1,00,000 while filing June month returns (July 20)
Supplier receives such addition in value on July 6: ToS for Rs.1,000
Tax to be paid on Rs.1,000 while filing July month returns (Aug 20)
Time of supply of services [section 13]
ANSWER : Time of supply for advance payment of Rs.3,000 is 6th May
As per section Supply
31 read with –rule
of Services Forward47 Charge
of CGST Rus, the tax invoice is to be issued within 30 days of supply of
service. In the Date
givenof provision
case, theof service
invoice is not issued within the Sep 15
prescribed time limit. As per section 13(2)(b), in
a case where theDate invoice
on whichisthenot issued
payment within inthe
is recorded the prescribed time, the time of supply of service is the date of
books of Not Available
account of supplier
provision of service or receipt of payment, whichever is earlier.
Therefore, the Date
timeonof supply
which of service
the payment to the
is credited extentbank
to supplier’s of 3,000 is 6th May as the date of payment of 3000 is
Nov 3 (Rs.12,000)
earlier than theaccount
date of provision of service. The time of supply of service to the extent of the balance 12,000
is 15th September which
Earlier (ToS) is the date of provision of service. Sep 15
ILLUSTRATION 6
Investigation shows that ABC & Co carried out service of cleaning and repairs
of tanks in an apartment complex, for which the Apartment Owners’
Association showed a payment in cash on 4th April to them against work of
this description. The dates of the work are not clear from the records of ABC
& Co. ABC & Co have not issued invoice or entered the payment in their
books of account.

ANSWER
Thus, time of supply will be 4th April, the date on which the Apartment
Owners’ Association records the receipt of service in its books of account.
Excess payment upto Rs.1000: Option of taking invoice date as
time of supply

• For a payment of upto Rs.1,000 in excess of the invoice value, the

supplier can choose to take the date of invoice issued with respect to
such excess amount as the time of supply of services. This provision
facilitates the supplier to defer payment of tax on small amounts
typically received by him in excess of the invoice amount
• Ex: A telephone company receives Rs.5,000 against an invoice of
Rs.4,800 on 5 October 2020. 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
Receipt of services that are taxable under reverse charge [Section 13(3)]
ANSWER Reverse Charge - Services
Date on which payment is recorded in the books of NA
recipient of services

Date on which payment is debited from the bank Aug 21

account of recipient of services

61st day from the issue of invoice by the supplier Jul 4

Earlier (ToS) Jul 4
ANSWER
As there is no prior entry of the amount in the books of account of ABC Ltd.,
July 2 will be the time of supply, being the date of payment in terms of
second proviso to section 13(3).
 Time of Supply of Vouchers – Sec 12(4)/13(4)

Time of supply in case of supply of

voucher–

Date of issue – If supply is

identifiable at the point of
issue of voucher

Date of redemption of
voucher – Other cases

Note: Voucher – can be for goods or services

27
© Indirect Taxes Committee, ICAI
Time of Supply of Vouchers

• Best Hospitality Services enters into agreement with Drive Marketing Ltd. By
which Drive Marketing Ltd. Markets Best Hospitality Services hotels rooms
and sells coupons/vouchers redeemable for a discount against stay in the hotel.
• As the supply against which the voucher will be redeemed is identifiable, the
time of supply of the voucher will be its date of issue.
 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 the
Earlier of
 Date of payment for the service
 Date of entry of the service in the books of account of the recipient
Ex: A software company receives a mobile app from its associate company in
Singapore and the same is recorded in software company’s books on
November 5, 2020 and payment is made on November 11, 2020.

ToS: November 5, 2020

Vouchers [Section 13(4)]
The term voucher has already been explained under the Heading “Time of
Supply of Goods”.
The time of supply of vouchers that are exchangeable for services is
stipulated as the date of issue of the voucher, if the supply is identifiable at
that point, or the date of redemption of the voucher in other cases.
Residual case [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:
Date on which periodical return for the period is required to be filed, or
In any other case, date on which GST is paid.
Thank You