Time of supply

In order to calculate and discharge tax liability it is very import to know the date when the tax liability arises

Time of supply of goods

Earliest of the following dates:

• Date of issue of invoice by the supplier.

• Date on which the supplier receives the payment

Time of supply of services

Earliest of the following dates:

• Date of issue of invoice by the supplier

• Date of provision of service

• Date on which the recipient shows the receipt of service in his books of account, in case the aforesaid two provisions do not apply

To understand the provision of advance payment on goods or services

Let’s take an example

Firm ‘A’ receives an advance of Rs. 2500/- on 29.07.17 for goods worth Rs. 10000/- to be supplied in the month of September, then it is deemed that firm ‘A’ has made a supply of Rs. 2500/- on 29.07.17 and tax liability on Rs. 2500/- is to be discharged by 20.08.17.

But government will be set a maximum limit for the advance of payment. If any advance received for a supply of goods or services the amount will be 1000 or less than it is the choice of the supplier that the invoice will be issue on the date of supply of goods or services.

What is the time limit for issue of invoice for goods and services?

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.

Similarly an invoice for supply of services needs to be issued before or after the provision of service but not later than thirty days from the date of provision of service.

Time of supply in case of Reverse Charger

Time of supply of goods

Earliest of the following dates:

• Date of receipt of goods

• Date on which the payment is entered in the books of accounts of the recipient or the date on which the payment is debited in his bank account, whichever is earlier?

 • Date immediately following 30 days from the date of issue of invoice or any other legal document in lieu of invoice by the supplier

Time of supply of services

Earliest of the following dates:

• Date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier?

 • Date immediately following 60 days from the date of issue of invoice or any other legal document in lieu of invoice by the supplier

Time of supply of services in case of supply by Associated Enterprises located outside India

 In this case, the time of supply is the date of entry in the books of account of the recipient or the date of payment, whichever is earlier.

Change in Rate of Tax in respect of supply of goods or services

 The normal time of supply rules changes if there is a change in the rate of tax of supply of goods or services. In this scenario, time of supply has to be determined in the following manner:

 Supply is completed before the change in rate of tax

Invoice issued before the date of change in tax rate	Payment received before the date of change in tax rate	Time of supply	Applicable rate of tax
No	No	Earliest of the date of invoice or payment	New rate of tax
Yes	No	Date of issue of invoice	Old tax rate
No	Yes	Date of receipt of payment	Old tax rate

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