GST - Time of supply

Background-

a. Time of supply chapter is almost similar to point of taxation (POT) rules of service tax.

b. POT rules determines the time when the services are deemed to have been provided.

c. It enabled to determine the rate of tax , Value of taxable service, rate of exchange and due date of payment of service tax.

d. On similar way time of supply is govern to fix the point when the liability to charge GST arises also takes into account when a supply is deemed to be made.

Liability to pay GST rises in respect supply of goods:

The time of supply of goods shall be the earliest of the following namely-

(i) The date on which the goods are removed by the supplier, where the supply of goods require removal; or
(ii) The date on which the goods are made available where the supply does not require removal; or
(iii) The date on which the supplier issues invoices with respect to the supply where the above two situations do not apply; or
(iv)The date on which the recipient shows the receipt of the goods in his books of accounts. 

Time of supply of goods can be understood by following illustration:

Liability to pay GST arise in respect of supply of services:

The time of supply is determined by the fact whether the invoice for supply of services has been issued within the prescribed period or beyond such prescribed period.

The prescribed period will be described in rules which are yet to be published, however looking at current regime it is believed it to be on similar lines as mentioned in POT rules.

Different scenario to determine time of supply

1. Supply of service when invoice is issued within prescribed period:

Such cases shall be the earliest of the following:

(i) Date of issue of invoice; or
(ii) The date of receipt of payment.

2. Supply of service when invoice is not issued within prescribed period:

Such cases shall be the earliest of the following:

(i) Date completion of the provision of service; or
(ii) The date of receipt of payment.

3. invoice is not issued and date of payment or date of completion of provision of service are also not ascertainable then-

The time of supply shall be the date on which the recipient shows the receipt of services in his books of accounts.

Now it’s important to know what does date of receipt of payment mean-

It is the earliest of the date on which the payment is entered in the books of accounts of the supplier or the date on which the payment is credited to his bank account.

Time of supply of goods can be understood by following illustration:

Cases where part advance payment is made or invoice issued is for part payment-

The supply shall be deemed to have been made to the extent it is covered by the invoice or the part payment.

Time of supply in Continuous supply of goods-

The time of supply of continuous supply of goods is;

• Where successive statements of accounts or successive payments are involved, the date of expiry of the period to which such successive statements of accounts or successive payments relate.
• Where there are no successive statements of account or successive payments involved, the date of issue of the invoice or the date of receipt of payment whichever is earlier.

The time of supply shall be the due date of payment, if ascertainable from the contract.

If not ascertainable, it will be earliest of date of receipt of payment or the date of issue of invoice or completion of event where payment is linked to completion of event.

Time of supply in tax payable under reverse charge-

The time of supply will be the earliest of the following dates:

a) Date of receipt of services;
b) Date on which payment is made;
c) Date of receipt of invoice;
d) Date of debit in the books of accounts by supplier.

Time of supply of goods under reverse charge can be understood by following illustration:

The author can be reached at avinash_sunchu@hotmail.com.