Time of Supply of Goods under GST

The time of supply of goods is a crucial concept under the Goods and Services Tax (GST) regime in India. It determines the point at which liability to pay tax arises. This ensures clarity in tax compliance and prevents discrepancies in tax payments. Section 12 of the CGST Act, 2017 provides guidelines for determining the time of supply of goods.

What is Time of Supply?

The time of supply refers to the date on which a taxable event occurs, i.e., when goods are deemed to be supplied. This is important for determining the applicable GST rate and the tax period in which the transaction is reported.

General Rule for Time of Supply (Section 12(2))

Under Section 12(2) of the CGST Act, the time of supply of goods is the earlier of the following dates:

• Date of issue of invoice by the supplier or the last date on which the invoice should be issued as per Section 31.

• Date of receipt of payment by the supplier.

Special Provisions for Excess Payments

If a supplier receives an excess amount of up to ₹1,000 over the invoice amount, the supplier may opt to treat the date of issuance of the invoice as the time of supply for the excess amount.

Time of Supply under Reverse Charge Mechanism (Section 12(3))

For transactions where reverse charge is applicable, the time of supply is the earliest of:

• Date of receipt of goods.

• Date of payment entry in books or the date when the payment is debited from the bank account.

• 30 days from the date of invoice issuance by the supplier.

• If none of the above is determinable, the date of entry in the books of the recipient is considered.

Time of Supply for Vouchers (Section 12(4))

For the supply of vouchers, the time of supply depends on their type:

• If the supply is identifiable at the time of voucher issuance, the date of issue is considered.

• Otherwise, the date of redemption is taken as the time of supply.

Time of Supply When Not Determinable (Section 12(5))

If the time of supply cannot be determined under the above rules, the tax liability arises on:

• The due date of filing the periodical return (if applicable).

• The date on which tax is paid (in other cases).

Additional Charges and Time of Supply (Section 12(6))

If there is an addition in the value of supply due to interest, late fees, or penalties, the time of supply is the date on which the supplier receives such additional charges.

Conclusion

Understanding the time of supply of goods is essential for businesses to ensure GST compliance. Correctly determining the time of supply helps in avoiding penalties and ensures smooth tax filing. Whether it is a regular supply, a reverse charge transaction, or vouchers, businesses should align their invoicing and payment recording with the GST provisions to ensure accurate tax calculations.

For professional assistance with GST compliance, feel free to consult a qualified Chartered Accountant (CA) to ensure seamless tax management.