Time of supply helps to determine rates of taxes and due dates up to which GST should be paid without incurring any interest.
In other words, it defines the time when goods/services are considered to be supplied.
Time of Supply of Goods [ u/s 12(2) CGST Act ]
Time of supply of goods is earlier of–
- Date of issue of invoice by the supplier[or the last date on which invoice should have been issued]; or
- Date of receipt of payment**
In case of advance received up to Rs.1,000/-, a supplier has an option to take time of supply as the date of subsequent invoice.
** Supplier of goods other than composite dealers are not required to pay GST on advance received on or after 15th Nov 2017. (Notification 66/2017 Central Tax)
Example 1: Before 15th Nov 2017
- Date of Issue of Invoice 1st October 2017
- Date of removal of goods 1st September 2017
- Date of receipt of payment 1st August 2017
Solution: Time of supply of goods is 1st August 2017
Example 2: On or After 15th Nov 2017
- Date of Issue of Invoice 20th December 2017
- Date of removal of goods 30th November 2017
- Date of receipt of payment 16th November 2017
Solution: Time of supply of goods is 30th November 2017 i.e the last date to issue an invoice.
Time of Supply of Goods under RCM [ u/s 12(3) CGST Act ]
Time of supply of goods under RCM is earlier of–
- Date of receipt of goods; or
- Payment date(earlier of date of payment entry in the recipient’s book or date of debit in bank a/c); or
- 30 days from the issue of invoice or any other documents by the supplier
If it is not possible to determine the time of supply under (1), (2) or (3), the time of supply shall be the date of entry in the books of account of the recipient.
Note- GST is payable on Advance payment to RCM suppliers.
- Date of receipt of goods 16th Dec 2017
- Date of debit in bank A/c 16th Dec 2017
- Date of invoice 20th Dec 2017
- Date of payment entry in books of recipient 14th Dec 2017
- Date of expense entry in books of recipient 30th Dec 2017
Solution: Time of supply of goods under RCM is 14th Dec 2017.
If for some reason time of supply could not be determined, then the time of supply will be 30th Dec 2017 i.e., date of expense entry in the books of the recipient.
Time of Supply of Goods through vouchers [ u/s 12(4) CGST Act ]
Voucher refers to a small printed piece of paper that entitles the holder to a discount, or that may be exchanged for goods or services eg. Amazon voucher, Sodexo meal passes etc.
Time of supply of goods through vouchers is earlier of–
- Date of issue of voucher, if the supply is identifiable at that point; or
- Date of redemption of voucher, in all other cases.
Example 4: On 20th December 2017, Big bazaar issues gift coupon to Mr.Ram. This coupon can be used to purchase Brand X’s Shoes only. Mr.Ram redeems the coupon on 2nd January 2018.
Solution: Time of supply of goods through vouchers is 20th December 2017 because the supply of Brand X’s Shoes is known at the time of issue.
When time of supply cannot be determined [ u/s 12(5) CGST Act ]
Where it is not possible to determine the time of supply under the above provisions, the time of supply shall––
- in a case where a periodical return has to be filed, be the date on which such return is to be filed; or
- in any other case, be the date on which the tax is paid.
Time of Supply of Goods to the extent of Interest etc. [ u/s 12(6) CGST Act ]
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.
Example 5: Raghu Traders sells goods to Mrs.Jaya on credit on 15th Dec 2017 for Rs.15,000/-. Mrs.Jaya made the payment of Rs.15,000/- and Rs.200/- as interest on 20th Feb 2018.
Solution: Time of supply of goods valuing Rs.15,000/- is on 15th Dec 2017. However, Time of supply of goods relating to interest portion is on 20th Feb 2018.
Recommended to Read: Time of Supply of services
Source: CGST Act, 2017