Time of Taxation under GST

Time of Supply of Goods

Time of supply of goods is earlier of the following dates-

1. Date of invoice
2. Last date on which invoice is required to issue under section 31(1). Invoicing in GST
3. The date on which seller receives the payment

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.

From above provision it is clear that GST is payable at time of receiving advance payment. At time of receiving advance payment, a Receipt Voucher is to be issued. The person making advance payment is eligible to take input tax credit only after generation of invoice. Refer to this guide on advance payment.

If the seller receives excess payment of Rs. 1,000 or less as compared to tax invoice then seller has option to consider time of supply of such excess amount from any two dates mentioned below

• date of receipt of such excess amount
• date of issue of invoice in respect of such excess amount

Tax on Reverse Charge basis

In case tax is payable on reverse charge basis the time of supply shall be earliest of the following dates

1. Date of receipt of goods
2. 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
3. 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

In case where date of supply can not be determined by above method, the time of supply shall be the date of entry in the books of account of the recipient of supply.

Time of Supply of Services

Times of supply of services shall be the earliest of the following dates-

1. Date of issue of invoice if invoice is issued within period prescribed in section 31(2)
2. Date of provision of service if invoice is not issued within period prescribed in section 31(2)
3. Date of receipt of payment

In case where date of supply can not be determined by above method, the time of supply shall be the date on which the recipient shows the receipt of services in his books of account.

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.

If the seller receives excess payment of Rs. 1,000 or less as compared to tax invoice then seller has option to consider time of supply of such excess amount from any two dates mentioned below

• date of receipt of such excess amount
• date of issue of invoice in respect of such excess amount

Tax on Reverse Charge basis

In case tax is payable on reverse charge basis the time of supply shall be earliest of the following dates

1. 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.
2. 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.

In case where date of supply can not be determined by above method, the time of supply shall be the date of entry in the books of account of the recipient of supply.

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.

Time of Supply of Goods/Services in case of Change in Rate of Tax

The time of supply, where there is a change in the rate of tax in respect of goods or services or both, shall be
determined in the following manner, namely:––

(a) in case the goods or services or both have been supplied before the change in rate of tax,––

(i) where the invoice for the same has been issued and the payment is also received after the change in rate of tax, the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; or
(ii) where the invoice has been issued prior to the change in rate of tax but payment is received after the change in rate of tax, the time of supply shall be the date of issue of invoice; or
(iii) where the payment has been received before the change in rate of tax, but the invoice for the same is issued after the change in rate of tax, the time of supply shall be the date of receipt of payment;

(b) in case the goods or services or both have been supplied after the change in rate of tax,––

(i) where the payment is received after the change in rate of tax but the invoice has been issued prior to the change in rate of tax, the time of supply shall be the date of receipt of payment; or
(ii) where the invoice has been issued and payment is received before the change in rate of tax, the time of supply shall be the date of receipt of payment or date of issue of invoice, whichever is earlier; or
(iii) where the invoice has been issued after the change in rate of tax but the payment is received before the change in rate of tax, the time of supply shall be the date of issue of invoice:

Provided that the date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after four working days from the date of change in the rate of tax.

Explanation.––For the purposes of this section, “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.

Source – GST Act 2017