What Is Time of Supply In GST?

There are 3 key concepts that help taxpayers understand the date when tax is due to be paid, the type of tax to be paid, and the tax amount to be paid. Together, these concepts are known as Time, Place and Value of Supply.

Time of supply in GST helps taxpayers understand the due date to pay tax to the government. In this article, we will discuss the concept of time of supply in detail, including how it is determined, and how it differs in various scenarios.

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    Time Place and Value of Supply

    Time of Supply Under Normal Charge

    The date the invoice is issued (or the final day by which it should have been issued) or the date of payment is received is when the goods are supplied.

    • The time of supply for any sum exceeding Rs. 1000 that the supplier receives over and above the invoice amount must, at the supplier’s discretion, be the date the invoice was issued.
    • The supply must be deemed to have been made to the extent covered by such papers as of the date of invoice issuance or the date of payment receipt (as the case may be).
    • The payment date must be received before the date the payment was recorded in the business’s books or when the money was credited to its bank account.

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    Time of Supply Under Reverse Charge

    A reverse charge refers to a situation in which the beneficiary of the products or services bears the tax burden rather than the supplier. The earliest of the following dates must be used as the time of supply in a reverse charge scenario.

    • The date of receipt of goods; OR
    • The date of payment; OR
    • The day following the 30-day mark from the supplier’s invoice release date (60 days for services).

    The date of entry in the recipient’s accounting records will serve as the time of supply if it is difficult to ascertain it under the circumstances mentioned above.

    The date of payment shall be earlier of –

    • Date when the recipient recorded the payment in his records; OR
    • The day that his bank account is debited for the payment

    Time of Supply In GST For Vouchers

    According to the CGST act, a voucher is an instrument that must be accepted as payment in whole or in part for the supply of goods and services, or both, or whose identity as a potential payment is stated on the instrument itself or in related documentation, such as the terms and conditions of use of such instruments. In the Indian economy, vouchers are frequently used for transactions. A store owner can issue a voucher for a specified supply or one known when the voucher is issued.

    In the case of the supply of vouchers, the time of supply is-

    • The voucher’s issuing date, if the supply can be determined at that time; OR
    • The date of redemption of the voucher, in all other cases

    When can the Time of Supply Not be Determined?

    The following will be the case if the aforementioned clause cannot be used to determine the time of supply:

    • The deadline for filing a periodical return; OR
    • In any other case, the day when the CGST/SGST is paid.

    The earliest of the dates listed above will be the tax collection event under the GST regime. The different actions that trigger the tax levy, such as issuing invoices or receiving payments in the case of a provision of goods or services or concluding activity in the case of a supply of services, demonstrate the government’s desire to guarantee that tax is collected as soon as possible.

    Rules of Time of Supply of Goods

    For supply of goods, the time of supply is considered to be the earliest of the 3 following dates:

    • The date on which the supplier first issued an invoice; OR
    • The last date by which the supplier is required to issue the invoice for the supply; OR
    • The date on which the supplier receives the payment for the goods supplied.

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    Rules of Time of Supply in GST of Services

    For supply of services, the time of supply is considered to be the earliest of the following dates:

    • Date of invoice issuance by the supplier (if it is issued within the time frame legally required by section 31(2) of the CGST Act or the date of payment receipt, whichever comes first).
    • Date of service provided (or, if earlier, the date of payment received, if the invoice is not issued within the legally required period under section 31(2) of the CGST Act)
    • If the conditions mentioned above do not apply, the date on which the receipt appears as a service receipt in his books of accounts.

    To the extent that the invoice or payment, as applicable, covers the supply of goods or services, it is considered to have been made.

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    Conclusion

    The Time of Supply in GST is a critical concept under the GST regime in India, as it determines the point in time when a transaction is considered to have occurred. Time of Supply helps businesses understand the deadline for the tax amount on that supply to be paid to the government.

    This is important for businesses as it is necessary to pay tax dues on time to stay GST compliant. Try BUSY GST Software to make GST compliance easy for your business.

    Frequently Asked Questions

    • How does Time of Supply impact GST returns?
      Time of Supply determines when a GST liability is triggered, meaning the taxpayer must account for the tax in their GST returns by this time. It directly affects the filing period in which tax needs to be reported and paid.
    • What happens if the Time of Supply is delayed or missed?
      If the Time of Supply is delayed or missed, it can lead to late filing and penalties. The taxpayer might need to pay interest on the delayed tax, and it may affect compliance records with GST authorities.
    • Can the time of supply for services differ from that of goods?
      Yes, the Time of Supply for services often differs from goods. For goods, it’s generally linked to the date of invoice or removal, whereas for services, it is tied to the completion of service or receipt of payment, whichever comes first.
    • How does Time of Supply interact with advance payments?
      If an advance payment is received, GST liability is triggered at that moment under Time of Supply rules. The taxpayer must pay GST on the amount of advance received, even before the supply of goods or services.
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