It's important for GST registered enterprises to know the concept of time of supply, as it determines the time when the liability for payment of tax arises. The time of supply for goods and services differs based on the transaction type. Hence, time of supply of goods and/or services can be categorised into time of supply of goods, time of supply of services, continuous supply of goods, goods liable for payment of tax on reverse charge basis, supply of goods on approval or return basis, services liable for payment of tax on reverse charge basis and residue cases.
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For goods, the time of supply is the earliest of date of issue of invoice by the supplier or the last day by which the supplier is required to issue invoice or the date of receipt of payment. All suppliers are required to issue invoice before or after the removal of goods for supply to the recipient or delivery of goods to recipient or making goods available to recipient.
Goods are said to be removed under GST when they are given to a transporter for taking to the recipient or dispatched by the supplier or when goods are collected by the recipient. Hence, goods are considered removed when the journey starts.
Date of receipt of payment is the earlier of date of receipt of payment or the date the payment was entered in the book of accounts of supplier or the date on which the payment is credited to the supplier's bank account.
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For some goods, vouchers are supplied for consideration which entities the recipient to certain goods. If a voucher entitles the recipient to buy certain specific item at a certain value, then the time of supply would be the time of redemption of voucher. If the voucher entities the recipient to buy a specific item, the time of supply would be the time of supply of voucher.
For certain goods like oil, gas, chemicals, supply might happen on a continuous basis. In such cases, the supplier bills the recipient on a regular or periodic basis. In such cases, the time of supply of goods will be the date of invoice or date of receipt of payment.
Under GST, recipient of goods is made liable for payment of GST. Instances where the recipient is made liable for GST is called reverse charge. For goods liable for payment of tax on reverse charge basis, the time of supply of goods is the earliest of the date of receipt of goods or the date on which the payment is made or the date immediately following 30 days from the date of issue of invoice by the supplier.
In case it is not possible to determine the time of supply of goods by the use of any of the above methods, then the residue method can be applied for determining the time of supply. Under residue method, the time of supply would be the date on which the periodical GST return has to be filed. If not return is to be filed, the time of supply would be the date on which CGST/SGST is paid.