When tax payable? Time of supply
Time of supply, enables determination "when does liability to pay GST arise."
CGST Law defines or explains Time of supply of goods and services. (Section 12 of CGST Act)
Time of supply of goods and services, factors considered,-
Ø Dependent on "destination" based principle
Ø Terms of supply relevant
Ø Earliest of:-
- Removal / making available goods or completion of service
- Invoicing
- Payment
- Reflection of receipt in buyer's books
Ø If none of above:-
- Due date of return; or
- GST payment
Based on above, situations specified are tabulated as follows:
Time of Supply of Goods and Services
| Sr. No | SITUATIONS | GOODS | SERVICES |
| 1 | Supply | Earlier of:- · Date of issue of invoice (Note 1) · Date of receipt of payment (Note1)(Note2) |
Invoice Issued within prescribed period: Earlier of: date of Issue of Invoice or date of receipt of payment (Note 1) (Note 3) Invoice is not issued within prescribed period: Earlier of: date of completion of provision of service or date of receipt of payment (Note 1) (Note 3) In case (1) and (2) above do not apply: Date on which recipient shows receipt of services in his books of account |
| (If excess amount of upto Rs.1000 is received, the time of supply to that extent may be taken to be date of issue of invoice) | |||
| 2 | Supplies on which tax is payable on reverse charge basis | Earliest of:- · Date of receipt of goods · Date of payment (i.e. earlier of date of entry in books of account or debit in bank account) · The date immediately following 30 days from issue of invoice or other document in lieu thereof.~ (If time of supply cannot be identified as above, it shall be the date of entry in recipient's books of account.) |
Earliest of the following being date:- · on which payment is made (i.e. earlier of date of entry in books of account or debit in bank account) · immediately following 60 days of issue of invoice or other document in lieu thereof (If time of supply cannot be identified as above it shall be the date of entry in recipient's books of account.) (If supply is by an associated enterprise located outside India the time of supply shall be earlier of date of entry in recipient's books of account or date of payment.) |
| 3 | Supply of voucher | · If supply is identifiable - date of issue of voucher · In other cases - date of redemption of voucher |
· If supply is identifiable - date of issue of voucher · In other cases - date of redemption of voucher |
| 4 | If it is not possible to determine supply as above · in a case where a periodical return has to be filed · in any other case |
. . Date when such return is to be filed . Date on which tax is paid |
. . Date on which such return is to be filed . Date on which tax is paid |
| 5 | Addition in the value of supply i.e. interest/late fee/penalty for delayed payment of consideration | Date on which supplier receives such additional amount | Date on which supplier receives such additional amount |
Notes
1. Where invoice or payment date considered, supply should be considered to the extent of amount invoiced or received.
2. Payment date shall be earlier of entry in books of account or credit in supplier's bank account
3. Receipt date shall be earlier of: entry in books of account or credit in supplier's bank account.
4. Payment receipt date shall be: earlier of entry in books or credit in bank account; however, if credit in bank after 4 days from the change in Rate, date of credit would be Payment receipt date.
Time of Supply of goods or service or both (G/S/B) in case of change in rate of tax (Section 14 of CGST Act)
1. G/S/B - supplied BEFORE change in rate of tax
| Invoice issued | After | Before | After |
| Payment received | After | After | Before |
| Whichever is earlier (i.e. new changed rate will apply) |
Date of issue of invoice Old rate will apply |
Date of receipt of payment Old rate will apply |
2. G/S/B - supplied AFTER change is rate of tax
| Invoice issued | Before | Before | After |
| Payment received | Before | After | Before |
| Time of supply will be | Whichever is earlier (i.e. old rate will apply) |
Date of receipt of payment New changed rate will apply |
Date of issue of invoice New changed rate will apply |
By and large liability is incurred on happening of specified event (at the earliest) as per terms of contract relating to invoice, payment, completion and the like. Such date may or may not coincide with date of recognition in books of account.
For a complete and thorough understanding, reference may be made to "Provisions at Glance" and "Explained +" in Instavat's GST laws.
Your Sincerely,
In the Service of Taxpayers
Instavat team.
