Time of Supply Of Services Under GST: What Every Business Needs to Know

For the purpose of paying tax liability, a point of taxation is required. And the time of supply is specified as the point of taxation. When the supplies were made at that time, the point of taxation arise. The concept of time of supply is required to understand to find out whether the supplies have been made or not. Once the time of supply has occurred, a supplier is required to discharge his GST liability. The GST Act provides a separate provision to determine the time of supply of goods and time of supply of services.

In this article, we will explain to you what the time of supply of services in GST means and elaborate on our discussion of both the forward charge and reverse charge mechanisms of the time of supply of services in GST.

Time Of Supply Of Services

The time of supply of goods is the time when the taxpayer is liable to pay the taxes levied upon the goods and services sold or transferred.

As per section 13(2) of CGST Act 2017, The time of supply of services shall be the earlier of the following dates:

1. If the invoice is issued as per the provision of section 31(2) of the CGST Act 2017,then the date of issue of invoice by the supplier or the date of receipt of payment, whichever is earlier; or
2. If the invoice is not issued as per the provision of section 31(2) of the CGST Act2017, then the date of provision of service or the date of receipt of payment, whichever is earlier; or
3. In case the above provisions of clause (a) or clause (b) do not apply, then the date on which the recipient shows the receipt of services in his books of account.

Note:

1. Time of issue of invoice for services, before or after the provision of service but within a period prescribed :

? 30 days in all cases except for banking & financial institutions from the date of supply of services.

? 45 days in cases of banking & financial institutions from the date of supply of services.

2. Time of issue of invoice, in case of continuous supply of services as per section 31(5) of the CGST Act 2017:

? Where the due date of payment is ascertainable/identified from the contract, the invoice shall be issued on or before the due date of payment.

? Where the due date of payment is not ascertainable/identified from the contract, the invoice shall be issued before or at the time when the supplier of service receives the payment.

? Where the payment is linked to the completion of an event, the invoice shall be issued on or before the date of completion of that event.

3. As per section 31(6) of CGST Act 2017, if the supply of services ceases under a contract before the completion of the supply, the invoice shall be issued at the time when the supply ceases and such invoice shall be issued to the extent of the supply made before such cessation.

4. Date of receipt of the payment by the supplier, payment is entered into the books of the account or credited in his bank account whichever is earlier.

Time of Supply of Services under Reverse Charge Basis

As per section 13(3) of CGST Act 2017, In case of supplies in respect of which tax is paid or liable to be paid on a reverse charge basis, the time of supply shall be the earliest of the following dates:

• The date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or
• The date immediately following sixty days from the date of issue of invoice or any other document in lieu of invoice by the supplier.

However, where it is not possible to determine the time of supply in the aforesaid manner, the time of supply shall be the date of entry in the books of account of the recipient of supply.

Further, in case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment, whichever is earlier.

Examples :

1. ABC Consultancy Services issued an invoice for services rendered to Mr. P on 5thAugust 2023. Determine the time of supply in the following cases:

? The provisions of services were completed on 1st July 2023.

? P made the payment on 15th August 2023, where the provision of services was remaining to be completed.

Answer :

? 1st July 2023 will be the time of supply of services as the invoice is not issued within the time frame of 30 days.

? 5th August 2023 will be the time of supply of services as the invoice is issued before the completion of the provision of services.

2. ABC Ltd., a registered firm, received services from PQR Ltd., an unregistered firm. PQR ltd. Issued invoice to ABC Ltd. On 1st July 2023. ABC Ltd. & PQR Ltd is not associated enterprises. Determine the time of supply of services if ABC ltd made the payments to PQR Ltd on 15th August 2023.

Answer :

15th August 2023 will be the time of supply of services as payment made earlier than the date immediately following 60 days from the date of issuance of invoice.

Time of Supply in Case of Vouchers

As per section 13(4) of CGST Act 2017, supply of vouchers by a supplier, the time of supply shall be:

• The date of issue of voucher, if the supply is identifiable at that point; or
• The date of redemption of the voucher, in all other cases i.e. voucher is not identifiable at that time.

Other Provision related to Time of Supply of Goods

As per section 13(5) of CGST Act 2017, Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4), the time of supply shall :

• In case where a periodical return has to be filed, be the date on which such return is to be filed or
• In any other case, be the date on which the tax is paid.

As per section 13(6) of the CGST Act 2017, The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value.

For more updates on Finance, GST, Taxation, Advisory follow us.