How to determine Time of Supply for services in GST
According to Section 13(2) of CGST Act, Time of Supply of services shall be the earliest of the following: -
(a) If the invoice is issued within the prescribed time limit: - Date of issue of invoice or Date of receipt of payment, whichever is earlier.
(b) If the invoice is not issued within the prescribed time limit: - Date of provision of service or Date of receipt of Payment, whichever is earlier.
(c) In any other case: - Date on which the recipient shows the receipt of service in his books of accounts.
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Time Limit prescribed for issuing Tax Invoice, Read the following article: https://www.taxwink.com/blog/how-to-issue-tax-invoice-for-services-under-gst |
Time Limit for issue of Tax Invoice for services
Since, Time of Supply in case of services is linked with the invoice, it is important to know that what is the prescribed time limit for issuing invoice in case of providing services. These are as follows: -
(a) The invoice in case of provision of taxable service shall be issued within 30 days from the date of supply of service.
(b) However, the insurer, banking company, financial institutions or NBFC may issue invoice within 45 days from the date of provision of service.
Explanation: -
“Date of receipt of payment” shall be the date on which the payment is entered in the books of accounts of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.
Example to understand ‘Time of Supply’ for services: -
|
Date of supply of service |
Date of issuing invoice |
Date of credit in bank account |
Date of entry of receipt in books |
Time of Supply |
|
13-01-2021 |
27-01-2021 |
01-02-2021 |
29-01-2021 |
27-01-2021 |
|
13-01-2021 |
27-01-2021 |
21-01-2021 |
19-01-2021 |
19-01-2021 |
|
13-01-2021 |
27-01-2021 |
11-01-2021 |
09-01-2021 |
09-01-2021 |
|
13-01-2021 |
15-02-2021 |
24-02-2021 |
21-02-2021 |
13-01-2021 |
|
13-01-2021 |
15-02-2021 |
11-02-2021 |
08-02-2021 |
13-01-2021 |
|
13-01-2021 |
15-02-2021 |
12-01-2021 |
10-01-2021 |
10-01-2021 |
GST on advance received up to Rs. 1,000
When the supplier of taxable services 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.
Time of Supply when GST on services 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 13(3) of the CGST Act, 2017, where the GST is payable on supply of services under RCM, Time of Supply shall be the earliest of the following: -
(a) Date of payment as 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.
(b) Date immediately following 60 days from the date of issue of invoice or any other document in lieu of invoice by the supplier.
But, where it is not possible to determine the time of supply in above manner, the Time of Supply shall be the date of entry in the books of the recipient of supply.
For example: - A Limited (Pune) procured goods from B Limited (Jaipur). Goods were transported by ABC Transport Services which issued consignment note dated 20th January, 2021. A Limited received goods from transporter on 25th January, 2021. It made payment of transport charges by cheque Rs. 17,000 on 28th January, 2021. The said cheque was debited in A Limited’s bank account on 1st February, 2021.
In this example: - A Limited will have to pay GST on transport services under RCM. For this purpose, the ‘Time of Supply’ shall be the earlier of: -
(a) Date of payment: - 28th January, 2021 or 1st Feb, 2021 whichever is earlier
(b) Date immediately following 60 days from the date of issue of invoice by supplier: - 22nd March 2021
Thus, in this example, the ‘Time of Supply’ for GST under RCM shall be: - 28th January, 2021.
Related Posts:-
https://www.taxwink.com/blog/gst-on-vouchers-for-goods-and-services
https://www.taxwink.com/blog/time-of-supply-of-goods-under-gst
