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Time of Supply

Last updated on 20 October, 2017

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What is the time of supply under GST?

The time of supply for a transaction is the date on which taxes are levied upon the goods and services sold or transferred.

Why is the time of supply important?

The time of supply for a transaction determines when the taxes will be due and which return the transaction must be recorded on. This is especially important for transactions where the invoice date isn’t the same as the payment or delivery date.

How is the time of supply determined?

  1. Time of Supply of Goods and/or Services

    • For transactions involving goods and services, the time of supply will be the earlier of the following dates:
      • Invoice date.
      • Payment date. (This is either the date on which the payment is recorded in the supplier’s books or the date the payment is credited to the supplier’s bank account, whichever is earlier.)
    • For example, suppose you purchased a bunch of goods in the month of July, and the supplier issued the invoice on the 18th of July. By agreement with the supplier, you make the payment several weeks later on the 12th of August, and the supplier records the transaction on their books the next day (the 13th of August). The time of supply for this transaction will be the earliest of all these dates, which is the 18th of July. 
    • Note: While making invoice payments, if a buyer pays an amount greater than the invoice amount (up to a maximum of Rs.1000 over the invoice amount), the time of supply for the excess amount is always the invoice date. It’s up to the supplier to decide if they should allow buyers to do this. Should the excess amount exceed Rs.1000, the seller must either refrain from collecting it or raise a separate invoice for the excess amount/advance collected).
  2. Time of supply for vouchers

    • For transactions involving vouchers, the time of supply is either the issue date of the voucher (if this can be identified) or the date the voucher was cashed in.

Time of supply for taxable transactions under reverse charge

Determining time of supply when none of the above methods apply

Determining the time of supply when there is a change in the GST rate of the goods and services supplied

According to Section 14, the time of supply for a transaction, where there is a change in the GST rate of goods and services supplied during the course of the same is as follows:

S.No Date of supply of goods and/or services Invoice issued Payment collected Time of supply (TOS) GST rate to be adopted
1. Before the change in GST rate After the change After the change TOS = Invoice issue date or payment collection date, whichever is the earliest of the two New GST rate
2. Before the change in GST rate Before the change After the change TOS = Invoice issue date Old GST rate
3. Before the change in GST rate After the change Before the change TOS = Payment collection date Old GST rate
4. After the change in GST rate Before the change Before the change TOS = Invoice issue date or Payment collection date, whichever is the earliest of the two Old GST rate
5. After the change in GST rate Before the change After the change TOS = Payment collection date New GST rate
6. After the change in GST rate After the change Before the change TOS = Invoice issue date New GST rate


       
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