TOPIC 6–TIME OF SUPPLY

Contents:

1. Introduction
2. Key provisions
3. TOS for supply of goods
4. TOS for supply of services
5. Practice Problems

1. INTRODUCTION
Point of taxation means the point in time when goods have been deemed to be
supplied or services have been deemed to be provided. The point of taxation
enables us to determine the rate of tax, value, and due dates for payment
of taxes.
Under GST the point of taxation, ie., the liability to pay CGST / SGST, will arise
at the time of supply(“TOS”) as determined for goods and services. There
are separate provisions for time of supply for goods and time of supply for
services. The provisions relating to time of supply essentially push the tax
collection event to the earliest possible time. Provisions of time of supply
under CGST Act have also been made applicable to IGST Act vide
section 20 of the IGST Act.

2. KEY PROVISIONS
Before we study the concept of the time of supply (TOS) for goods and
services, it is important to understand following:

1) Meaning of date of payment

Point of time when supplier receives the payment or date of receipt of
payment: The phrase “the date on which supplier receives the payment” or
“the date of receipt of payment” means the date on which payment is entered
in his books of accounts or the date on which the payment is credited to his
bank account, whichever is earlier.

Date of Payment Received = Date of book entry or bank credit

whichever is earlier
Date of Payment Made = Date of book entry or bank debit whichever
is earlier
Cash Payment = Date of book entry in supplier’s books

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Time of Supply

Book Entry Bank Credit

Example 1
Sunidhi Ltd. Provided business support services to Bansi on 10th August for
` 50,000. The invoice for the same was issued on 20th August. Sunidhi Ltd.
received the payment against the said invoice on 14th August vide cheque
dated 12th August. The entry for the receipt of payment was made in the
books of accounts on 14th August itself. However, the amount was credited in
the bank A/c on 25th August. Determine the date of payment in the given
case.

2) GST Payment Due Dates

General Monthly 20th of next month

Composition Scheme Quarterly 18th of next month

Supplier following the quarter

3. TOS FOR GOODS [SECTION 12]

In order to determine TOS for goods, first it is important to understand the
due date for issue of invoice.

3.1. Invoice Due dates

1) Time to issue invoice for supply in normal cases [Section 31(1)]

Sr No Particulars Invoice
1. Supply of goods involving Before or at the time of
movement of goods removal of goods for supply
to the recipient.
2. Supply of goods in other cases Before or at the time of
delivery of goods or while
making goods available to
the recipient

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 Time of Supply

Example 2
A supplied goods to B. Goods were removed from shop on 5th July and
delivered at B’s premises on 7th July. What is the due date of issue of invoice?

Example 3
C purchased goods from D’s shop on 15th July and transported the same to his
premises on his own account. Goods reached C’s premises on 16th July. What
is the due date of issue of invoice?

2) Time to issue invoice for continuous supply[Section 31(4)]

Meaning of continuous supply of goods [Section 2(32)]

Continuous supply of goods means a supply of goods which is provided, or
agreed to be provided, continuously or on recurrent basis, under a
contract, whether or not by means of a wire, cable, pipeline or other
conduit, and for which the supplier invoices the recipient on a regular or
periodic basis and includes supply of such goods as the Government may,
subject to such conditions, as it may, by notification, specify.

Time to issue invoice:

Where Successive
cash
Where Successive
Statements of
Payments are
Accounts are
involved
Involved

Invoice shall be Invoice shall be

issued before or at issued before or at
the time when the time when
each such each such payment
statement is issued is received

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Time of Supply

3) Time to issue invoice for goods sent on approval [Section 31(7)]

In case of goods sent or taken on approval for sale or return, invoice should
be issued before or at the time of supply or 6 months from the date of
removal, whichever is earlier.

Before or at the time

or Six months from
when it becomes
the date of removal
known that the supply
whichever is earlier
has taken place

Example 4
A Ltd. sent goods on approval to B Ltd. on 1st August and B Ltd gave approval
on 15th March. What is the due date of issue of invoice?

3.2. Time of supply rules for goods

a) Default Rule/General Rule/FCM Rulefor Goods[Section 12(2)]

The time of supply shall be considered earliest of the following dates:
• Date of issue of invoice by the supplier. If the invoice is not issued, then
the last date on which the supplier is legally bound to issue the invoice
with respect to the supply
• Date on which the supplier receives the payment

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 Time of Supply

Last date on
Date when the
Date of issue which invoice
payment is
of Invoice is required to
received
be issued

Note 1: Suppose, a part of the consideration is paid in advance or

invoice is issued for part payment, the time of supply will not cover
the full supply. The supply shall be deemed to have been made to the
extent it is covered by the invoice or the part advance payment.
However, in case of goods, tax is not payable on advance
received, even if advance or part payment has been received
before the issue of invoice/last day to issue invoice.

Note 2 : Rounding Off Payments

In case of small payments up to `1,000 in excess of the invoice amount, TOS
can be taken to be the date of issue of invoice for such excess, at the option
of the supplier. This provision facilitates the supplier to defer payment of tax
on small amounts typically received by him in excess of the invoice amounts.

For example, if a supplier has received an amount of `1500/- against an

invoice of `1100/- on 25th July and the date of invoice of next supply to the
said recipient is 14th August, then he has an option to treat the time of supply
w.r.t `400/- either as 25th July or 14th August.

Since, no GST is payable on advance received in case of goods, the

above provisions relating to GST on part payment/excess payments
are practically irrelevant.

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Time of Supply

Example 5

Last day to Date of Date of TOS Due Date of

Issue Invoice Payment GST
Invoice Payment
3rd August 3rd August 10th August
3rd No Invoice 6th September
September
3rd October 3rd October 1st October

Example 6
A chocolate company places an order for supply of milk with Amul.
The following dates are available:
 Date of removal/delivery of goods – 5th August
 Date on which invoice is issued – 5th August
 Date on which payment is entered in books of accounts – 4th August
 Date on which payment is credited in bank account – 7th August
1. What is the last date of issue of invoice?
2. What is the date of payment?
3. What is the time of supply?

Example 7
A machine has to be supplied at site. It is done by sourcing various
components from vendors and assembling the machine at site. The details of
the various events are:
17th September Purchase order with advance of `50,000 is received
for goods worth `12 lakh and entry duly made in the
seller’s books of account
20th October The machine is assembled, tested at site, and
accepted by buyer
23rd October Invoice raised
4th November Balance payment of `11,50,000 received
What is the time of supply?

b) RCM Rule for goods [Section 12(3)]

Time of supply of goods when tax is to be paid on reverse charge basis
Earliest of the following dates:
• Date of receipt of goods
• Date on which the 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
• Date immediately following 30 days (‘Lapse Date -31st day’) from the
date of issue of invoice or any other legal document in lieu of invoice by
the supplier

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 Time of Supply

Book entry or Lapse Date

Date of
bank debit (31st day from
Receipt of
whichever is issue of
goods
earlier Invoice)

However, if it is not possible to determine the time of supply in aforesaid

manner, then the time of supply is the date of entry of the transaction in the
books of accounts of the recipient of supply.

It may be noted that no GST on advance payment against goods

applies only in case of FCM. However, in case of RCM GST is payable at
the time of advance payment if payment is recorded/made before the
receipt of goods.

Example 8
Date of Date of Date of TOS Due Date
Receipt of Payment Invoice of GST
goods Payment
30th August Bank Debit 21st August
5th
September
Book entry
– 4th
September
31st August Bank Debit 30th August
& Book
Entry 1st
September

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Time of Supply

Example 9
XYZ Ltd. sold goods to DEF Ltd. Such goods falls within the purview of reverse
charge. The goods were received by DEF Ltd. on 1st August. The invoice was
dated 25th July while the payment was made on 3rd August. What is the time
of supply?

Example 10
Determine the time of supply from the given information.
May 4 Supplier invoices goods taxable on reverse charge basis
to Bridge & Co. (30 days from the date of issuance of
invoice lapse on June 3)
May 12 Bridge & Co receives the goods
May 30 Bridge & Co makes the payment

Example 11
Determine the time of supply from the given information.

May 4 Supplier invoices goods taxable on reverse charge basis

to Pillar & Co. (30 days from the date of issuance of
invoice lapse on June 3)
June 12 Pillar & Co receives the goods, which were held up in
transit
July 3 Payment made for goods

c) Voucher rule for goods [Section 12(4)]

A voucher has been defined in the CGST Act

[Section 2(118)] as an instrument where
there is an obligation to accept it as
consideration or part consideration for a
supply of goods or services or both, and
where the goods or services or both to be
supplied or the identities of their potential
suppliers are either indicated on the
instrument itself or in related documentation, including the terms and
conditions of use of such instrument.

Vouchers are commonly used for transaction in the Indian economy. A

shopkeeper may issue vouchers for a specific supply i.e. supply which is
identifiable at the time of issuance of voucher. In trade parlance, these are
known as single purpose vouchers. For example, vouchers for pressure
cookers or television or for spa or haircut. Similarly, a voucher can be a
general purpose voucher which can be used for multiple purposes. For
example a `1000/- voucher issued by Shopper’s Stop store can be used for

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 Time of Supply

buying any product or service at any Shopper’s Stop store. The time of
supply is different in case of single purpose voucher and in the case of
general purpose voucher.

Time of supply in the case of single purpose voucher i.e. case where supply
is identifiable at the time of issuance of voucher is the date of issue of
voucher. However, in all other cases of supply of vouchers, the time of
supply is the date of redemption of voucher.

Example 12
Acme sales Limited sells food coupons to a company, which gives these to its
employees as part of the agreed perquisites. The coupons can be redeemed
for purchase of any item of food /provisions in the outlets that are part of the
program. What is the time of supply?

Example 13
With each purchase of a large pizza during the Christmas week from Perfect
Pizza, one can buy a voucher for `20 which will be redeemable till 5 Jan for a
small pizza. What is the time of supply?

d) Residual rule for goods [Section 12(5)]

In case it is not possible to determine the time of supply under aforesaid
provisions, the time of supply is:
• Due date of filing of return, in case where periodical return has to be
filed
• Date of payment of tax in all other cases.

e) Addition in value rule for goods [Section 12(6)]

Time of supply related 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 supplier receives such addition in value. For example, a
supplier receives consideration in the month of September instead of due date
of July and for such delay he is eligible to receive an interest amount of
`1000/-and the said amount is received on 15th December. The time of supply
of such amount (`1000/-) will be 15th December i.e. the date on which it is
received by the supplier and tax liability on this is to be discharged by 20th
January.

It is to be noted that the above clause only covers interest/late fee/penalty for
delayed payment of consideration. Other penalties where payment is not due
to delay in consideration payment are not covered above. E.g. Penalty for
cancellation of order by the buyer.

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Time of Supply

4. TOS FOR SERVICES [SECTION 13]

In order to determine TOS for services, first it is important to understand the
due date for issue of invoice.

4.1. Invoice Due dates

1) Time to issue invoice for supply in normal cases [Section 31(2) -

read with Rule 47]
The detailed provisions are discussed in subsequent chapter relating to GST
procedures.

Particulars Invoice
Supply of services Before the provision of service
or within30 days/45 days
(in case of Insurance
companies/banks/NBFC)
from the date of supply of
service.
Note: An insurer or a banking company or a financial institution, including a
non- banking financial company, or a telecom operator, or notified suppliers,
making taxable supplies of services between distinct persons as specified in
section 25, may issue the invoice before or at the time such supplier records
the same in his books of account or before the expiry of the quarter during
which the supply was made.

Example 14
Ms X provided consultancy services to Mr Y on 20th July. What is the due date
of issue of invoice?

2) Time to issue invoice for continuous supply [Section 31(5)]

Meaning of continuous supply of services [Section 2(33)]
Continuous supply of services means a supply of services which is provided,
or agreed to be provided, continuously or on recurrent basis, under a
contract, for a period exceeding three months with periodic payment
obligations and includes supply of such services as the Government may,
subject to such conditions, as it may, by notification, specify.

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 Time of Supply

Time to issue invoice:

1 2 3
Where the due date Where the due date Where the payment is
of payment is of payment is not linked to the
ascertainable from ascertainable from completion of an
the contract the contract event

Invoice shall be issued

Invoice shall be issued
Invoice shall be issued before or at the time
on or before the date
on or before the due when the supplier of
of completion of that
date of payment the service receives
event
the payment

3) Time to issue invoice if supply ceases [Section 31(6)]

In a case where 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.

4.2. Time of supply rules for services

a) Default Rule/General Rule/FCM Rule for services [Section 13(2)]

The time of supply for services will be determined as below-
 If invoice is issued within time, time of supply shall be earlier of –
 Date of issue of Invoice, or
 Date of receipt of payment
 If invoice is not issued within time, time of supply shall be earlier of –
 Date of provision of service, or
 Date of receipt of payment
 In any other case-
 Date on which recipient shows the receipt of service in his books of
accounts

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Time of Supply

• Date of issue of Invoice, or

If invoice is issued
• Date of receipt of payment
whichever is earlier within 30 days

• Date of provision of service, or If invoice is not

• Date of receipt of payment issued within
whichever is earlier 30 days

• Date on which recipient shows

the receipt of service in his Other Cases
books of accounts

Note 1 : Advance
If a part of the consideration is paid in advance or invoice is issued for
part payment, the time of supply will not cover the full supply. The
supply shall be deemed to have been made to the extent it is covered
by the invoice or the part advance payment.

In case of advance received, the TOS shall be the Date of Receipt of

Advance

Note 2: Rounding Off Payments

In case of small payments up to `1,000 in excess of the invoice amount, TOS
can be taken to be the date of issue of invoice for such excess, at the option
of the supplier.

Example 15
Date of Date of Date of TOS Due Date
Provision of Invoice Receipt of of ST
Service payment Payment
3rd August 5th August 10th August
3rd September 7th September 6th September
3rd October 3rd October 1st October
3rd November 15th December 16th December
3rd December 31st January 1st Decemebr
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 Time of Supply

23rd 30th December 50% Advance

December Received on
28th November
& Balance 50%
received on
15th January

Example 16
A software company avails the training services of a technical expert for its
employees.
The following dates are available:
 Date of supply of service – 27th July
 Date on which invoice is issued – 18th August
 Date on which payment is entered in books of accounts – 11th August
 Date on which payment is credited in bank account – 14th August
1. What is the last date of issue of invoice?
2. What is the date of payment?
3. What is the time of supply?

Example 17
Determine the time of supply from the following particulars:
6th May Booking of convention hall, sum agreed `15000,
advance of`3000 received
th
15 September Function held in convention hall
27th October Invoice issued for `15000, indicating balance of
`12000 payable
3rd November Balance payment of `12000 received

Example 18
Investigation shows that ABC & Co carried out service of cleaning and repairs
of tanks in an apartment complex, for which the Apartment Owners’
Association showed a payment in cash on 4th April to them against work of
this description. The dates of the work are not clear from the records of ABC &
Co. ABC & Co have not issued invoice or entered the payment in their books of
account.

b) RCM Rule for Services [Section 13(3)]

Time of supply of services when tax is to be paid on reverse charge basis

Earliest of the following dates:
 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

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Time of Supply

 Date immediately following 60 days(‘Lapse Date’) from the date of

issue of invoice or any other legal document in lieu of invoice by the
supplier

Book entry or bank Lapse Date (61st

debit whichever is day from isssue of
earlier Invoice)

However, if it is not possible to determine the time of supply in aforesaid

manner, then the time of supply is the date of entry of the transaction in the
books of accounts of the recipient of supply.

Example 19
Date of Date of TOS Due Date
Payment Invoice of ST
Payment
Bank Debit - 25th July
1st August
Books – 31st
July
Bank Debit - 14th August
16th August
Books – 13th
August

Example 20
Mr. A supplied services to Mr. B on 5th August. Such services comes under the
purview of reverse charge. He issued the invoice on 25th August and received
the payment on 9th October. What is the time of supply?

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 Time of Supply

Example 21
Mihir Ltd of Assam received some taxable services which are covered under
RCM 5th January for which invoice was raised on 8th January. Determine the
TOS if Mihir Ltd makes the payment on 1) 27th January or 2) 12th March?

Example 22
Determine the time of supply from the given information. (Assuming that
service being supplied is taxable under reverse charge).

May 4 The supplier of service issues invoice for service

provided. There is a dispute about amount payable,
and payment is delayed.
August 21 Payment made to the supplier of service

Time of supply of services in case of supply by Associated Enterprises1

located outside India In this case, the time of supply is the date of entry in
the books of account of the recipient or the date of payment, whichever is
earlier.

Date of Date of
Book entry Payment

Example 23
XYZ Ltd located in India and holding 51% of the shares of ABC Ltd, a US based
company. ABC Ltd provides business auxiliary services to XYZ Ltd. From the
following details determine TOS for XYZ Ltd:
 Date on which services are provided by ABC Ltd – 16th September

1
Associated enterprises as defined in section 92A of the Income-tax Act, 1961
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Time of Supply

 Date on which Invoice is sent by ABC Ltd – 19th September

 Date on which debit in the books of accounts of XYZ Ltd – 30th September
 Date on which payment is made by XYZ Ltd – 23rd December

Example 24
Determine the time of supply from the given information:

May 4 A German company issues email informing its associated company

ABC Ltd. of the cost of technical services provided to it.

July 2 ABC Ltd transfers the amount to the account of the German company

c) Voucher rule for services [Section 13(4)]

The rule is same as discussed under goods.

Example 25
Best Hospitality Services enters into agreement with Drive Marketing Ltd by which
Drive Marketing Ltd. markets Best Hospitality Services’ hotel rooms and sells
coupons / vouchers redeemable for a discount against stay in the hotel.

f) Residual rule for services [Section 13(5)]

In case it is not possible to determine the time of supply under aforesaid provisions,
the time of supply is:
• Due date of filing of return, in case where periodical return has to be filed
• Date of payment of tax in all other cases.

g) Addition in value rule for services [Section 13(6)]

The rule is same as discussed under goods.

5. PRACTICE PROBLEMS

Problem 1
Rohan supplies certain material to G on 11th December and raises the invoice on
the same date. The payment was received on 26th December and it was entered in
his books of account on the same date and credited in his bank account on 28th
December.
a. What shall be the time of supply in the above case?
b. What will be your answer if the invoice was raised on 16th December instead of
11th December.

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 Time of Supply

Problem 2
Kabira Industries Ltd engaged the services of a transporter for road transport of
a consignment on 17th June and made advance payment for the transport on the
same date, i.e. 17th June. However, the consignment could not be sent immediately
on account of a strike in the factory, and instead was sent on 20th July. Invoice
was received from the transporter on 22nd July.
What is the time of supply of the transporter’s service?

Problem 3
Raju Pvt Ltd. receives the order and advance payment on 5th January for carrying
out an architectural design job. It delivers the designs on 23rd April. By
oversight, no invoice is issued at that time, and it is issued much later, after the
expiry of prescribed period for issue of invoice.
When is the time of supply of service?

Problem 4
An order is placed on Ram & Co. on 18th August for supply of a consignment of
customized shoes. Ram & Co. gets the consignment ready and informs the customer
and issues the invoice on 2nd December. The customer collects the consignment
from the premises of Ram & Co. on 7th December and electronically transfers the
payment on the same date, which is entered in the accounts on the next day, 8th
December.
What is the time of supply of the shoes for the purpose of payment of tax?

Problem 5
Piyush, a registered person, supplied certain goods to G also a registered person.
The tax in respect of aforesaid goods is liable to be paid on Reverse Charge Basis.
Other details in respect of the above transaction are as under:
(a) Date of the receipt of goods by G 16th October
(b) Date on which the payment is made and 12th November
entered in the books of account by G
(c) Date when the payment is debited in the bank 14th November
account of G
(d) Date of issue of Invoice by Piyush, the supplier 10th October
(e) Date immediately following 30 days from the 10th November
date of issue of invoice by the supplier
Determine the time of supply of goods under reverse charge basis.

Problem 6
Gauri purchases Vouchers for ` 10,000 on 10th December from Arrow Shirts Ltd. for
supply of shirts. She gifted these vouchers to her friend Geet on his birthday so
that he can buy shirts of his choice. Geet exchanged the gift the gift vouchers on 5th
January and got three shirts. Determine the time of supply of shirts.

Problem 7

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Time of Supply

Sahil purchase gift voucher for `15,000 on 9th December from a trader M/s Croma,
which deals in variety of products. The aforesaid voucher is valid for a period of
three months. Voucher is exchanged for product X ON 15th January. Determine the
time of supply.

Problem 8
Venkatesh supplies goods to Rohit for `1,80,000 on 12th October on one month
credit. It is also specified in the invoice that if the recipient fails to make payment
within aforesaid one month, then interest @ ` 1,800 shall be charged for every
delay of one month or part thereof. Rohit makes the payment of ` 1,80,000 on 5th
December. However, in respect of interest, he requests Venkatesh for complete
waiver, But Venkatesh agrees for waiving only 40% of `1,800. Consequently, Rohit
makes payment of `1,080 as interest on 10th January. Determine the time of supply
of goods and time of supply in relation to value of supply by way of interest.

Problem 9
A firm of advocates issues invoice for services to ABC Ltd. on 17th Feb. The payment
is contested by ABC Ltd. on the ground that on account of negligence of the firm,
the company’s case was dismissed by the Court for non-appearance, which
necessitated further appearance for which the firm is billing the company. The
dispute drags on and finally payment is made on 3rd November.
Identify the time of supply of the legal services.

Problem 10
Mahesh, a chartered accountant, provides the following details:
(a) Date of supply of services 24th Nov
(b) Date of issue of invoice (within 30 days of 27th Nov
provision of services)
(c) Date of entering the payment in the books of 6th Dec
account
(d) Date of credit of payment in bank 5th Dec
Determine the time of supply of services.

Problem 11
Vodafone Ltd, a registered person, provides the following information in respect of
its regular customer, M/s. Ravi Associate:
Date Particulars Amount `
1 Jan
st
Supply of telephone services for ` 2,500
the month of December, 20XX
1st Jan Date of Invoice ` 2,500
18 Jan
th
Receipt of Payment ` 3,000
Excess amount received ` 500[` 3,000-` 2,500]
Determine the time of supply of excess payment.

Problem 12
M/s Pranav Associates, a partnership firm, provided recovery agent services to

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 Time of Supply

Newtron Credits Ltd., a non-banking financial company and a registered supplier,

on 15th January. Invoice for the same was issued on 7th February and the payment
was made on 18th April by Newtron Credits Ltd. Bank account of the company was
debited on 20th April.
Determine the following:
(i) Person liable to pay GST
(ii) Time of supply of service

Problem 13
Determine the time of supply from the information given below:
R Ltd. U.K. company issues email informing its 14th
associated company X Ltd. of the cost of technical October
services provided to it.
X Ltd transfer the amount to the account of the U.K. 12th
company December
There is no entry recorded in the books of account of X Ltd.

Problem 14
Roxy Dry Cleaners Ltd. issues vouchers of ` 70,000 to R Ltd on 12th Dec. R Ltd
distributes the aforesaid vouchers amongst its employees who shall get it redeemed
in one month’s time. Determine the time of supply of vouchers.

Problem 15
Fitness Ltd. is engaged in supply of two different taxable services namely Gym.
Services and Hair Treatment Services. It issues voucher of ` 12,000 to Ganesh on
12th Jan. The said voucher can be redeemed within two months from the date of
such voucher for either of two aforesaid services or partly for each of the two
aforesaid services. Ganesh redeems the said voucher on 10th March for Hair
Treatment Services only. Determine the time of supply of voucher.

Problem 16
M/s. Ramchandra Associates has received some taxable services from Mohan Dalal
(P) Ltd. on 12.01.2020 by making a cash payment of ` 5,00,000 on same day. The
payment was entered in the books of account of M/s. Ramchandra Associates on
16.01.2020 and in the books of account of Mohan Dalal (P) Ltd. on 20.01.2020. The
invoice was issued by Mohan Dalal (P) Ltd. on 18.01.2020. Determine the time of
supply in the given case. [RTP May 2019]

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