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Supply of Service – Under Indian GST


Supply of Service – Under Indian GST

Under GST, the place of supply includes all forms of supply of goods and/or services. The categories include such as sale, transfer, barter, exchange or license. In addition, it also includes rental, lease or disposal made or agreed by a person in the course or furtherance of business. In this article, we look at the applicability of GST on the supply of service.

Supply of Service

The liability to pay Central GST or State GST on services would arise at the time of supply. As per GST regulations, the time of supply of services shall be:

  • The date of issue of invoice or the date of receipt of payment, whichever is earlier, if the invoice is issued within the prescribed period;
  • Completion of the provision of service or the date of receipt of payment. The date shall relate to the earlier processed date and applies if the supplier yet to receive the invoice by the prescribed period.
  • The date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or (b) do not apply.

The invoice or the payment covers the payment for the supply of goods under GST. Further, the date of receipt of payment shall relate to the date. The date shall relate with the payment entered in the books of accounts of the supplier. Similarly, it can also relate to the date on which the payment is credited to the bank account.

Continuous Supply of Service

In case of continuous supply of services, the time of supply shall be:

  • The recipient of the service shall hold responsibility for the payments if the payment crosses the due date during ascertainable contracts. It applies if the supplier issued with the invoice or payment or not.
  • Where the due date of payment is not ascertainable from the contract, each such time when the supplier of service receives the payment or issues an invoice, whichever is earlier;
  • Where the payment links to the completion of an event. Further, it shall also include the time of completion of that event.
  • The following mentions the earliest of the following dates for tax paid or liable for reverse charge. It applies during the time of supply:
    • The date of receipt of services, or
    • Date on which the payment is made, or
    • Receipt of the invoice date or
    • The date of debit in the books of accounts.

If it is not possible to determine the time of supply of services, then the time of supply would be when a periodical GST return has to be filed or the date on which the Central GST or State GST is paid.