In the erstwhile tax regime, the point of taxation or thepoint of applicability of taxes were different fordifferent taxes like in case of Central Excise it is onmanufacture but levied at the time of removal of goods,in case of Service Tax at the time of invoicing or within 30days of completion of service or in the case of VAT it is onthe sale of goods. As the point of taxation is different fordifferent taxes it was creating confusion and alsobecoming tough to manage the same, in GST the point oftaxation is known as “Time of Supply” and it is differentfor goods and services as the nature of supply is differentfor both. Time of Supply determines the applicability ofTaxes on the transaction be it supply of goods or services,i.e. at this point of the transaction the tax liability has tobe accounted along with the issue of the tax invoice.
In order to calculate and discharge tax liability it is important to know the date when the tax liability arises i.e. the date on which the charging event has occurred. In GST law, it is known as Time of Supply. GST law has provided separate provisions to determine the time of supply of goods and time of supply of services. Sections 12, 13 & 14 of the CGST Act, 2017, deals with the provisions related to time of supply and by virtue of section 20 of the IGST Act, 2017, these provisions are also applicable to inter-State supplies leviable to Integrated tax.
Time of Supply under Forward Charge :-
Time of supply of goods –
The time of supply shall be the earliest of the following: –
a) Date of issue of the invoice by the supplier (OR) last date on which he is required to under section 31, to issue invoice.
b) Dates on which the supplier receives the payment.
Note-
- No GST at the time of receipt of advances for supply of goods.
- The date of receipt of payment shall be earlier of-
(a) The date on which payment is entered in the books of accounts; OR
(b) The date on which the payment is credited to bank account.
Time of supply of Service
a) In case invoice is issued within 30 days from the date of supply of service (45 days in case of bank/NBFC/Insurance companies), time of supply of service is
Earliest of the following: –
- Date of issue of invoice.
- Date of Receipt of payment.
b) If Invoices is issued after 30 days/ 45 days (as said above),time of supply of service is
Earliest of the following: –
- Date of provision of service
- Date of Receipt of payment.
c) When the above events are uncertainable
- Date on which the recipient shows the receipt of service.
Time of Supply under Reverse Charge :-
Time of supply of goods –
The time of supply shall be the earliest of the following: –
a) Date of Receipt of goods.
b) Date of payment as entered in the books.
c) 31st day from the date of issue of invoice by the supplier
Time of supply of Service –
Supply shall be the earliest of the following: –
a) Date of payment as entered in the books or the date on which account is debited.
b) 61st day from the date of issue of invoice by the supplier.
Time of supply for vouchers for goods and services :–
In case of supply of vouchers the time of supply is-
(a) The date of issue of the voucher, if the supply can be identified at that point.
OR
(b) The date of redemption of the voucher, in all other cases.
While under pre-GST regime of indirect taxation, the taxable event was sale or removal, under GST regime it is supply. Accordingly, we need to revisit the time of taxation, and understand how the time of taxation under GST works-out. Under the GST regime, the tax collection event occurs at the earliest of the above said dates discussed under different provisions. This confirms that the government wants to collect tax at the earliest possible time. As there are multiple parameters for determining the time of supply i.e., the occurrence of the charging event, it becomes challenging to maintain and reconcile the same between financials and GST records. For this reason, has become crucial for the business persons and professionals in GST field to have a clear understanding over these provisions related to determination of time of supply.
