Guide on Time of Supply as per Section 12 of CGST Act, 2017

TIME OF SUPPLY UNDER GST LAW:

Guide on Time of Supply as per Section 12 of Central Goods and Services Tax Act, 2017

Time of Supply of Goods

1. Concept of Time of Supply (TOS)

• GST is levied at the time of supply of goods or services as prescribed under Section 12 – Goods & Section 13 – Services. Time of Supply determines the point in time when GST liability arises : Section 12 applies to Forward charge supplies, Reverse charge supplies, Residual cases, Additional consideration (interest, late fee, penalty) (Voucher provisions deleted w.e.f. 01-10-2025). These provisions are also applicable to IGST via Section 20 of the integrated goods and services tax.

Meaning of Time of Supply

Time of supply means the point in time when goods/services are considered supplied’. When the seller knows the ‘time’, it helps him identify due date for payment of taxes. CGST/SGST or IGST must be paid at the time of supply. Goods and services have a separate basis to identify their time of supply. Importance of Time of Supply

1. Supply of goods
2. Supply of services
3. Reverse charge.

Why time of supply important?

Time of supply means the point in time when goods/services are considered supplied’. When the seller knows the ‘time’, it helps him identify due date for payment of taxes.

Section 12 of Time of Supply of Goods

(1) The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section.

 (2) The time of supply of goods shall be the earlier of the following dates, namely:—

 (a) The date of issue of invoice by the supplier or the last date on which he is required, under sub-section (1) of section 31, to issue the invoice with respect to the supply; or

(b) The date on which the supplier receives the payment with respect to the supply:

 Provided that where the supplier of taxable goods receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice in respect of such excess amount.

Explanation 1.––For the purposes of clauses (a) and (b), “supply” shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment.

 Explanation 2.––For the purposes of clause (b), “the date on which the supplier receives the payment” shall be the date on which the payment is entered in his books of account or the date on which the payment is credited to his bank account, whichever is earlier.

 (3) In case of supplies in respect of which tax is paid or liable to be paid on  reverse charge basis, the time of supply shall be the earliest of the following dates, namely:—

 (a) The date of the receipt of goods; or

 (b) The 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;

 (c) The date immediately following thirty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier:

Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the time of supply shall be the date of entry in the books of account of the recipient of supply.

(4) In case of supply of vouchers by a supplier, the time of supply shall be—

 (a) The date of issue of voucher, if the supply is identifiable at that point; or

 (b) The date of redemption of voucher, in all other cases.

(5) Where it is not possible to determine the time of supply under the provisions of sub-section(2) or sub-section (3) or sub-section (4), the time of supply shall––

 (a) In a case where a periodical return has to be filed, be the date on which such return is to be filed; or

 (b) In any other case, be the date on which the tax is paid.

(6) The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value.

Section – 13 Time of supply of services

(1) The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of this section.

 (2) The time of supply of services shall be the earliest of the following dates, namely:—

 (a) The date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or

(b) The date of provision of service, if the invoice is not issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or

 (c) The date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not apply:

Provided that where the supplier of taxable service receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice relating to such excess amount.

Explanation.–For the purposes of clauses (a) and (b)––

• The supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment;

(ii) “The date of receipt of payment” shall be the date on which the payment is entered in the books of account of the supplier or the date, on which the payment is credited to his bank account, whichever is earlier.

(3) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earlier of the following dates, namely:––

 (a) The 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; or

 (b) The date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier:

 Provided that where it is not possible to determine the time of supply under clause (a) or clause (b), the time of supply shall be the date of entry in the books of account of the recipient of supply:

Provided further that in case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment, whichever is earlier.

(4) In case of supply of vouchers by a supplier, the time of supply shall be––

 (a) The date of issue of voucher, if the supply is identifiable at that point; or

 (b) The date of redemption of voucher, in all other cases.

 (5) Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4), the time of supply shall

(a)   In a case where a periodical return has to be filed, be the date on which such return is to be filed; or

(b) In any other case, be the date on which the tax is paid.

 (6) The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value.

Liability to Pay Tax – Section 12(1)

GST liability on goods arises at the time of supply, as determined under Section 12. Time of supply = Point when tax becomes payable

Time of Supply under Forward Charge – Section 12(2)

General Rule : Time of Supply shall be the earlier of Date of issue of invoice, or Last date on which invoice is required to be issued under Section 31, OR Date of receipt of payment

Meaning of “Date of Receipt of Payment”

• Explanation 2 to Section 12(2): Earlier Date of entry in books of accounts, or Date of credit in bank account

Time Limit for Issue of Invoice – Section 31

(a) Normal Supply of Goods – Section 31(1) :

• Invoice to be issued Before or at the time of removal (if movement involved), or before or at the time of delivery (if no movement)

(b) Continuous Supply of Goods – Section 31(4)

• Invoice to be issued Before or at the time of issuing each statement of account, or before or at the time of receipt of each payment

(c) Goods Sent on Approval Basis – Section 31(7)

• Invoice to be issued earlier of Before or at the time of supply, or 6 months from date of removal

Advances on Supply of Goods – Notification 66/2017-CT

• Key Relief (w.e.f. 15-11-2017) : GST is NOT payable on advances received for supply of goods, except for Composition dealers & specified actionable claims
• Applicable to: All forward charge suppliers of goods
• Not applicable to: Services (GST still payable in advance)
• Revised Time of Supply for Goods (Post Notification) : Time of Supply = Date of issue of invoice or last date required u/s 31

Excess Amount up to INR 1,000 – Proviso to Section 12(2)

• If supplier receives up to INR 1,000 excess over invoice value At supplier’s option, Time of Supply for excess may be date of invoice & practically irrelevant after Notification 66/2017 for goods.

Supply Covered to the Extent of Invoice/Payment

• Explanation 1 to Section 12(2) : Supply is deemed made only to the extent covered by Invoice, or Payment However Partial invoice or advance = Time of Supply applies only to that portion.

Time of Supply under Reverse Charge – Section 12(3)

• Time of Supply shall be earliest of Date of receipt of goods or Date of payment (earlier of book entry or bank debit) or 30 days from date of supplier’s invoice. Moreover, that Advance payment under RCM triggers GST liability.
• If none determinable: Time of Supply = Date of entry in books of recipient (Proviso to Section 12(3))

Time of supply under reverse charge

Reverse charge means the liability to pay tax is by the recipient of goods/services instead of the supplier. In case of reverse charge, the time of supply shall be the earliest of the following dates—
(a) The date of receipt of goods OR
(b) The date of payment OR
(c) The date immediately after THIRTY days from the date of issue of invoice by the supplier (60 days for services)

If it is not possible to determine the time of supply under (a), (b) or (c), the time of supply shall be the date of entry in the books of account of the recipient.

For clause (b) – the date of payment shall be earlier of-
(a) The date on which the recipient entered the payment in his books
OR
(b) The date on which the payment is debited from his bank account

Example:
(a) Date of receipt of goods 10th May 2017
(b) Date of payment 10th July 2017
(c) Date of invoice 1st June 2017
(d) Date of entry in books of receiver 13th May 2017
Time of supply of goods 10th May 2017
If for some reason time of supply could not be determined supply under (a), (b), or (c) then it would be 13th May 2017 i.e., date of entry.

Voucher Provisions – Deleted

• Voucher-related Time of Supply provisions u/s 12(4) are deleted w.e.f. 01-10-2025.

Residual Cases – Section 12(5)

• If Time of Supply cannot be determined u/s 12(2) or 12(3) If return required → Due date of return, otherwise → Date of payment of tax

Interest, Late Fee, Penalty – Section 12(6)

• Time of Supply for additional consideration due to Interest, Late fee & Penalty. Date of receipt of such additional amount. These amounts form part of taxable value.

When the time of supply cannot be determined

If it is not possible to determine the time of supply by the above provisions, then it will be-
(a) The date on which a periodical return has to be filed
or
(b) The date on which the CGST/SGST is paid, in any other case.

In the GST regime, the tax collection event will be the earliest of the dates as given above. The various events like issuing invoice/making payment in case of a supply of goods and services or completion of the event-in case of a supply of service triggering the tax levy confirm that the Government wants to ensure tax is collected at the earliest point of time.

This will be altogether a new concept for the current VAT and Central Excise taxpayers.

There are multiple parameters in determining ‘time’ of supply. Thus, businesses will face a challenge in maintaining and reconciling between revenue as per financials and as per GST.

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