Time of Supply/ Point of Taxation

Time of Supply/ Point of Taxation

 GST is payable on supply of goods or services. A supply consists of elements that can be segregated or separated in respect to time, like purchase order or agreement for sale, provision of services, despatch of goods, delivery of goods. Payment, entry of payment or amount deposited to Bank. So at which of these points of time, will GST become payable? Will it become payable when an agreements to supply goods or services are provided or when invoices is issued or when payment is made? What happens if the goods are delivered over a period of time? What happens if the services are provided over a period of time?  Provision relating to ‘time of supply’ provides answer to all such questions that arise on the timing of the liability to pay CGST and SGST/UTGST (Intra-State supply) and IGST (Inter-State Supply) as time of supply fixes the point of time when the liabilites to pay tax arises.

Time of Supply of Goods, u/s 12 of CGST Act

Time of Supply of Goods under forward charge The time of supply of goods shall be (a) Date of issue of tax invoice [When invoice is issued within time limit of issue of invoice] (b) Last date on which invoice ought to have been issued [When invoice is not issued within time limit] (c) Date of receipt of payment –Earlier of the above three Note : 1. Time limit for issue of invoice for supply of goods (a) Where supply involves movement of goods → at the time or before the removal of goods. (b) Where supply does’t involve movement of goods → at the time or before the delivery of goods. (c) In case of continious supply of goods: → at the time or before the time of issuance of periodical statement. Note: 2. Date of receipt of payment shall be (a) Date on which the payment is recorded in the books of accounts of the supplier (b) Date on which the payment is credited to the supplier’s Bank A/c

Note : 3. If the payment received is upto Rs. 1000 in excess of the invoice amount, the supplier can choose to take the date of invoice issued with respect to such excess amount as the time of supply of goods for such excess value. Note: 4. When the payment is received in instalments, the time of supply shall be determined seperately for each instalment.

Time of Supply of Services

Time of supply of services under forward charge Section 13(2) CGST Act prescribed the manner for determination of time of supply in case of supply of services under forward charge: Case  1 : Invoice has been issued within time limit u/s 31 The time of supply shall be (a) Date of issue of invoice (b) Date of receipt of payment Earlier of the above two. Case 2 : Invoice has not been issued within time limit u/s 31 The time of supply shall be (a) Date of provision of service (b) Date of receipt of payment Earlier of above two Note: 1. Time limit for issue of invoice (a) For Banking and Financial institution-within 45 days from the provision of service (b) For other case–within 30 days from the date of provision of service. Note: 2. Date of receipt of payment shall be (a) Date on which the payment is recorded in the books of accounts of the supplier (b) Date on which the payment is credited to the supplier’s Bank A/c Note : 3. If the payment received is upto Rs. 1000 in excess of the invoice amount, the supplier can choose to take the date of invoice issued with respect to such excess amount as the time of supply of goods for such excess value.

Note: 4. When the payment is received in instalments, the time of supply shall be determined separately for each instalment.

Time of Supply of vouchers

In case of supply of vouchers by a supplier, the time of supply (TOS) shall be (a) The date of issue of voucher → If supply is identifiable at the point (b) The date of redemption of Voucher → if supply is not identifiable at that point of issue of voucher. Where it is not possible to determine the time of supply u/s 12, then time of suply shall be (a) Date on which periodic return has to be filed (b) In other case → the date on which tax is paid.

Supply of Goods under Reverse Charge Mechanism (RCM)

Section 12(3) of CGST Act provides that in case of supply of goods under RCM, the time of supply shall be (a) Date on which the goods received (b) Date of payment earlier of (i) Date of payment by Debiting Bank A/c (ii) Date of Book entry (c) Date immediately following 30 days from the date of issue of invoice.

Time of Supply of Service under RCM

 (a) Transaction between non-associate enterprises Section 13(3) of CGST Act provides that in case of supply of services taxable under RCM the time of supply shall be (i) Date of payment (ii) Date immediately following 60 days from the date of issue of invoice. Note: If Time to supply (TOS) can’t be determined as above parameters, then the TOS is the date of book entry of services in the Books of recipient.

 (b) Transaction between associated enterprises. TOS shall be earlier of (i) Date of payment (ii) Date of debit entry in the books of accounts of the recipient of services.