The time of supply for goods is the closest date when the invoice is issued by the supplier, the due date on which the supplier must issue the invoice or the date when the receipt of payment is issued. Every supplier must mandatorily issue an invoice either
- Prior to or after the assigned goods have been shipped to the receipt.
- When the goods have been delivered.
- After the goods to be supplied are made accessible to the receipt.
The time of supply of goods or services will be the determining factor on when exactly the goods and services supplied by the supplier will be eligible for taxation.
It is crucial that every enterprise registered under GST must know the concept of time of supply to help them calculate when it will be liable to pay the taxes. Based on the type of transaction processed, the time of supply for both goods and services varies.
Categorization of Time of Supply of Goods and Services
The time of supply for goods and services are categorized into the following
- Time of supply of goods.
- Time of supply of services.
- A continuous supply of goods.
- Goods liable for payment of tax on reverse charge basis.
- Supply of goods on approval or return basis.
- Services liable for payment of tax on reverse charge basis and residue cases.
Point of Taxation Under GST
The point of taxation is the point of time when the goods have been assigned and deemed to be supplied or the time when services are reckoned to be provided. This point of taxation allows one to determine the rate of tax, the value of goods or services and the due dates for the payment of taxes.
As per GST, the point of taxation (liabilities for making payments towards CGST/SGST) will take place during the time when the supply will be determined for the goods and services. The provisions for time of supply for both goods and time of supply for services varies from one another.
Determining Factor for Time of Supply
The time of supply of goods to be considered will be earlier of either of the following dates
- The date when the invoice is issued (or the final day when the invoice should have been issued)
- The date when the receipt for the payment is issued.
Time of Supply of Goods
Time of Supply of Goods will be the earlier of either of the following dates
- The date when the invoice is issued by the supplier or, under Section 28, the last day assigned for the supplier to issue the invoice for the supply he/she has carried out.
- The date when the supplier receives the payment for the supply of goods.
Time of Supply of Services
Taxpayers registered under GST who supply taxable services must issue a tax invoice either before or after the services has been provided. The tax invoice will show the description of the service provided, the value of the service, the tax payable factor and any other details as mandated. The Central or State Government on the suggestion and notification of the Council must specify the categories of the services. As per the categorization, any other document issued against the supply will be deemed as the tax invoice (subjected to conditions and limitations as prescribed).
Continuous Supply of Services
- If the contract can confirm the due date of the payment, then the invoice will be issued after or prior to the day after the recipient has made the payment. The invoice must be issued within a period depending on whether the recipient has made any payment for the service rendered by the supplier.
- If the due date of payment cannot be confirmed from the contract, the issuing of the invoice will be done before or after service provider receives the payment within the prescribed period.
- In case the payment for the rendered service is linked to a contract which states that payment will be made after completion of an event, then the invoice shall be issued before or after the day when the event is completed (within a prescribed period).
Time of Supply in case of Reverse Charge
For any supply where tax must be paid or is liable to be paid on a reverse charge basis, then its time of supply will be the earliest of either of the following dates
- The date when the receipt for goods is issued.
- The date when the payment for the supply is credited.
- The date when receipt of invoice is issued.
- The date when the debit is recorded in the books of accounts.
Options Available when it’s not Possible to Determine the Time of Supply
- The exact date when a periodical return must be filed.
- The date when CGST or SGST is paid.
As per the GST regime, the date for the tax to be collected will be the earliest of the dates as given above. Various events such as issuing of the invoice, payments made against the supply of goods and services or the completion of an event for the supply of service, ensures that the government of India, under GST, wants to follow a timely collection of taxes by assigning the due date as the earliest of many events.
GST is altogether a fresh and new concept from the former taxation system (VAT and Central Excise).