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 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.
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.
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 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 –
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 following will be the case if the aforementioned clause cannot be used to determine the time of supply:
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.
For supply of goods, the time of supply is considered to be the earliest of the 3 following dates:
For supply of services, the time of supply is considered to be the earliest of the following dates:
To the extent that the invoice or payment, as applicable, covers the supply of goods or services, it is considered to have been made.
The Time of Supply 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