Time of Supply of Goods under GST Explained | Taxation for CA Intermediate PDF Download

Introduction

Time of supply plays a crucial role in GST regulations, defining the moment when goods or services are considered provided by the supplier. It determines the point at which the taxpayer becomes liable to pay taxes. This article focuses on the time of supply for goods under GST, while a separate article covers the time of supply for services.

Time of Supply under Normal Charge

The time of supply of goods is determined by the following dates:

Earlier of the Following Dates:

• The date of issuing the invoice (or the last day by which the invoice should have been issued)
• The date of receipt of payment

Notes:

If the supplier receives an amount up to Rs.1,000 more than the invoice amount, the time of supply for the extra amount is the date of the invoice issuance (at the supplier's discretion).
For both scenarios (a) and (b), the supply is considered to have been made to the extent covered by the invoice or payment.

Regarding point (b), the date of receipt of payment is determined by:

• The date when the payment is recorded in the supplier's books
• The date when the payment is credited to the supplier's bank account

Illustration:
(a) Date of invoice 15th May 2021
(b) Date of receipt of payment 10th July 2021
(c) Date when supplier recorded receipt in books 11th July 2021

The time of supply will be 15th May 2021.

Time of supply under reverse charge

Time of supply under reverse charge refers to the moment when tax liability arises for the recipient rather than the supplier of goods/services. In such cases, the time of supply is determined as follows:
(a) The date of goods receipt
OR
(b) The date of payment
OR
(c) The date immediately following thirty days from the invoice issue date by the supplier (sixty days for services).
If the time of supply cannot be determined using (a), (b), or (c), it defaults to the date of entry in the recipient's books of account.

For clause (b), the date of payment is the earlier of:

• The date the recipient records the payment in their books
• The date the payment is debited from their bank account.

Illustration:

(a) Date of receipt of goods 15th May 2021
(b) Date of payment 15th July 2021
(c) Date of invoice 1st June 2021
(d) Date of entry in books of receiver 18th May 2021 

Time of supply of goods 15th May 2021 

If for some reason time of supply could not be determined supply under (a), (b) or (c) then it would be 18th May 2018 i.e., date of entry

For vouchers, the time of supply is:
(a) The voucher issue date, if the supply is identifiable at that point
OR
(b) The voucher redemption date, otherwise.

Time of supply for vouchers

When the time of supply cannot be determined by the above rules, it defaults to:
(a) The periodical return filing date
OR
(b) The tax payment date, otherwise.

When time of supply cannot be determined

If it is not possible to determine the time of supply by the above provisions, then it will be-
(a) The date on which a periodical return has to be filed
OR
(b) The date on which the tax is paid, in any other case. 

Under the GST system, the tax collection event occurs at the earliest of these dates. Various events such as issuing invoices or making payments for goods or services, or completing an event in the case of service supply that triggers tax liability, demonstrate the government's aim to ensure timely tax collection.

The determination of the "time" of supply involves multiple parameters, leading to ongoing challenges for businesses in reconciling revenue between financial records and GST records.