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.
In this article, we will cover the time of supply of services for various situations. We have covered the time of supply of goods in the previous article. Click to read- HERE.
Time of Supply of services [ u/s 13(2) CGST Act ]
Time of supply of services is earlier of–
- Date of issue of invoice by the supplier[where invoice is issued within the prescribed period ]; or
- Date of receipt of payment**; or
- Date of provision of service[where invoice is not issued within the prescribed period ]; or
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.
** The date of receipt of payment shall be earlier of-
- Date on which the payment is entered in the books of the supplier; or
- Date on which the payment is credited to his bank account.
Example 1: Where invoice is issued within 30 days of provision of service
- Date of Issue of Invoice -1st October 2017
- Date of provision of Services -15th September 2017 (irrelevant)
- Date of receipt of payment -1st August 2017
Solution: Time of supply of services is 1st August 2017 i.e earlier of invoice date and payment date.
Example 2: Where invoice is not issued within 30 days of provision of service
- Date of Issue of Invoice-22nd December 2017 (irrelevant)
- Date of provision of services-15th November 2017
- Date of receipt of payment-16th November 2017
Solution: Time of supply of services is 15th November 2017 i.e earlier of the date of provision of service and date of payment.
Time of Supply of Services under RCM [ u/s 13(3) CGST Act ]
Time of supply of Services under RCM is earlier of–
- Date of Payment (earlier of date of payment entry in the recipient’s book or date of debit in bank a/c); or
- 60 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) or (2), the time of supply shall be the date of entry (expense) in the books of account of the recipient.
- Date of receipt of service-16th Dec 2017 (irrelevant)
- 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
Time of supply of services 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 Services by foreign associated Enterprises (RCM) [ u/s 13(3) CGST Act ]
Associate enterprise has been defined under section 92A of Income Tax Act. Two enterprises shall be deemed to be associated enterprises if, at any time during the previous year,—
- One Enterprise holding 26% or more voting power in another enterprise
- One Enterprise advancing loan up to 51% or more of the book value of the total assets of the other enterprise
- One enterprise guarantees 10% or more of the total borrowings of the other enterprise
- And few more………..
In case of supply of service by associated enterprises located outside India, the time of supply shall be earlier of–
- Date of entry in the books of the recipient; or
- Date of payment
Time of Supply of services through vouchers [ u/s 13(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 for services through vouchers is earlier of–
- Date of issue of voucher, if the supply is identifiable at that point; or
- Date of redemption of the voucher, in all other cases.
Example 4: On 20th December 2017, Club Salon issues a Haircut coupon to Mrs.Radha. Mrs.Radha redeems the coupon on 2nd January 2018.
Solution: Time of supply of services through vouchers is 20th December 2017 because the supply of service i.e haircut is known at the time of issue of the voucher.
When the time of supply cannot be determined [ u/s 13(5) CGST Act ]
Where it is not possible to determine the time of supply under 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 Services to the extent of Interest etc. [ u/s 13(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 Motors repairs Car of Mr.Ram on credit on 15th Dec 2017 for Rs.15,000/-. Mr.Ram made the payment of Rs.15,000/- and Rs.200/- as interest on 20th Feb 2018.
Solution: Time of supply of repairing services valuing Rs.15,000/- is on 15th Dec 2017. However, Time of supply of repairing service relating to interest portion is on 20th Feb 2018.
Source: CGST Act, 2017