How can we determine ‘Time of Supply’ of Goods under GST
The ‘Time of Supply’ of goods shall be the earlier of the following dates [Section 12(2) of CGST Act]: -
(a) Date of issuing Invoice (or the last day up to which invoice should have been issued in respect of supply); OR
(b) Date on which the supplier receives the payment/ advance [Not applicable w.e.f. 15-11-2017]
Time limit for issue of invoice for supply of goods
- As per Section 31 of the CGST Act, the registered supplier is required to issue tax invoice before or at the time of removal of goods for supply to recipient, where the supply involves movement of goods
- In other cases, Invoice should be issued before or at the time of delivery of goods or making goods available to the recipient.
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In simple words, the ‘Time of Supply’ in respect of supply of goods shall be the time of removal/ delivery of goods to customer as the supplier cannot remove the goods from his premises before raising the tax invoice. |
GST on advance received up to Rs. 1,000
Where the supplier of taxable goods receives payment of an amount up to Rs. 1,000 in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess shall be the ‘Date of issuing Invoice’ at the option of the supplier. Accordingly, in case of an advance up to Rs. 1,000, GST is not payable at the time of receipt of advance but at the time of issuing invoice.
Important Explanation: -
The ‘Date on which the supplier receives the payment” shall be the date on which the payment is entered in his books of accounts or the date on which the payment is credited to his bank accounts, whichever is earlier.
We shall take an example to understand the ‘Time of Supply’. Suppose the supplier dispatches goods on 17th January, 2021. He receives the payment on 20th January, 2021 but records the payment in books on 22nd January, 2021. In this example: - The invoice should be issued on 17th January, 2021. The date of payment received shall be 20th January, 2021. Thus, the ‘Time of Supply’ shall be earlier of date of invoice or date of payment received i.e., 17th January, 2021.
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It should be noted that till 15-11-2017, the GST was liable to be paid even in case of advances received against supply of goods or services. However, this condition was relaxed w.e.f. 15-11-2017 in respect of supply of goods. Thus, no GST is now liable to be paid on any advances received against supply of goods to be made by a registered person (other than Composition Dealer). But the said relaxation is not in respect of supply of services. |
Time of Supply when GST is payable on RCM
Reverse Charge Mechanism (RCM) means a mechanism where the liability to pay tax lies with the recipient of goods/ services instead of the supplier.
According to Section 12(3) of CGST Act, ‘Time of Supply’ where tax is paid under RCM shall be the earlier of the following: -
(a) Date of receipt of goods
(b) Date on which payment is entered in the books of accounts of the recipient or the date on which the payment is debited in his bank account, whichever is earlier
(c) Date immediately following 30 days from the date of issue of invoice or any other legal document by the supplier.
But, where it is not possible to determine the ‘Time of Supply’ according to above rule, then the time of supply shall be the date of entry of transaction in the books of accounts of the recipient of supply.
For example: - A Limited (Pune) procured goods from B Limited (Jaipur). Goods are liable for GST under RCM. A Limited received goods from transporter on 25th January, 2021. It made payment of goods to B Limited by cheque Rs. 17,000 on 28th January, 2021. The said cheque was debited in A Limited’s bank account on 1st February, 2021. Date of invoice is 20th January, 2021.
In this example: - A Limited will have to pay GST on goods under RCM. For this purpose, the ‘Time of Supply’ shall be the earlier of: -
(a) Date of receipt of goods: - 25th January, 2021
(b) Date of payment: - 28th January, 2021 or 1st Feb, 2021 whichever is earlier
(c) Date immediately following 30 days from the date of issue of invoice by supplier: - 20th February, 2021
Thus, in this example, the ‘Time of Supply’ for GST under RCM shall be: - 25th January, 2021.
Read Article on "GST on vouchers for goods & services:- https://www.taxwink.com/blog/gst-on-vouchers-for-goods-and-services
