Time of Supply in case of Goods and in case of Services

The Concept of “Time of Supply” under the Goods and Services Tax (GST) regime in India is crucial as it determines the point in time when the GST becomes payable. It is at this point that the tax liability arises, and the tax must be paid to the government. The time of supply varies depending on the nature of the supply, i.e., whether it is a supply of goods or services. Here’s an overview:

Time of Supply for Goods

As per the CGST Act, the time of supply of goods shall be the earliest of the following dates:

• The date of issue of invoice by the supplier or the last date on which he is required, under Section 31, to issue the invoice with respect to the supply.
• The date on which the supplier receives the payment with respect to the supply.

If it is not possible to determine the time of supply using the above criteria, the time of supply shall be:

• The date of entry in the books of account of the recipient of supply, or
• The date on which the goods are received by the recipient,

whichever is earlier.

Time of Supply for Services

For services, the time of supply is determined as follows:

1. The date of issue of invoice by the supplier, if the invoice is issued within the prescribed period under Section 31(2) of the CGST Act, or the date of receipt of payment, whichever is earlier.
2. The date of provision of service, if the invoice is not issued within the prescribed period under Section 31(2), or the date of receipt of payment, whichever is earlier.
3. The date on which the recipient shows the receipt of services in his books of account, in a case where the above does not apply.

Special Provisions

• Reverse Charge Mechanism (RCM):

In cases where the reverse charge mechanism applies, the time of supply is the earliest of the following: the date of receipt of goods or services, the date of payment as entered in the books of account or the date immediately following 60 days from the date of issue of invoice by the supplier.

• Vouchers:

For supply of vouchers, the time of supply is the date of issue of the voucher, if the supply is identifiable at that point. Otherwise, it is the date of redemption of the voucher.

• Associated with Addition in Value:

If there is an addition in value by way of interest, late fee, or penalty for delayed payment of any consideration, the time of supply shall be the date on which the supplier receives such addition in value.