Time of Supply of Goods

The

Model GST Law unveiled by the Finance Ministry in June 2016 has defined applicability of GST in India with the definition for the time of supply of goods. It is important to understand the concept of time of supply of goods to determine GST applicability. In this article, we review the definition for the time of supply of goods under GST law.

The liability to pay CGST/SGST on services shall arise at the time of supply, as determined in terms of the provisions of this section.
The time of supply of services shall be:
1. 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; or
2. the date of completion of the provision of service or the date of receipt of payment, whichever is earlier, if the invoice is not issued within the prescribed period; or
3. 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.
4. Explanation 1 - For the purposes of clauses (a) and (b), the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment.
5. Explanation 2 - For the purpose of clause (a) and (b) of sub-section (2), “the date of receipt of payment” shall be the date on which the payment is entered in the books of accounts of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.
In case of continuous supply of services, the time of supply shall be:
1. where the due date of payment is ascertainable from the contract, the date on which the payment is liable to be made by the recipient of service, whether or not an invoice has been issued or any payment has been received by the supplier of service;
2. 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;
3. where the payment is linked to the completion of an event, the time of completion of that event;
For the purposes of subsection (3) above, the Central or a State Government may on the recommendation of the Council, specify, by notification, the supply of services that shall be treated as a continuous supply of services;
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, namely,
1. the date of receipt of services, or
2. the date on which the payment is made, or
3. the date of receipt of invoice, or
4. the date of debit in the books of accounts.
5. Explanation - For the purpose of clause (b) of sub-section (5), “the date on which the payment is made” shall be the 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.
In a case where the supply of services ceases under a contract before the completion of the supply, such services shall be deemed to have been provided at the time when the supply ceases.
Where it is not possible to determine the time of supply of services in the manner specified in sub-section (2), (3), (5) and (6), the time of supply shall
1. in a case where a periodical return has to be filed, be the date on which such return is to be filed; or
2. in any other case, be the date on which the CGST/SGST is paid.

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Frequently Asked Questions

Common questions about Time of Supply of Goods under GST Law.

The time of supply of goods under GST law refers to the point in time when the liability to pay CGST/SGST on goods arises. The article provides the definition and conditions for determining the time of supply of goods under the Model GST Law.

The liability to pay CGST/SGST on goods arises at the time of supply, as determined in terms of the provisions defined in the article. The time of supply of goods is a crucial concept to understand for determining the applicability of GST.

If an invoice is issued within the prescribed period, the time of supply of goods is the earlier of the date of issue of the invoice or the date of receipt of payment.

If an invoice is not issued within the prescribed period, the time of supply of goods is the earlier of the date of completion of the provision of goods or the date of receipt of payment.

The time of supply of goods is based on the date on which the recipient shows the receipt of goods in their books of account, in cases where the conditions of invoice issuance or payment receipt do not apply.

In case of continuous supply of goods, the time of supply is determined based on factors such as the due date of payment as per the contract, the date of payment receipt or invoice issuance, or the time of completion of an event linked to the payment.

In case of supplies where tax is paid or liable to be paid on a reverse charge basis, the time of supply of goods is the earliest of the dates of receipt of goods, payment made, receipt of invoice, or debit in the books of accounts.

If it is not possible to determine the time of supply of goods using the specified methods, the time of supply is the date on which a periodical return has to be filed, or the date on which the CGST/SGST is paid, in case no periodical return needs to be filed.

Understanding the concept of time of supply of goods is crucial for determining the applicability of GST. It helps in ascertaining the point in time when the liability to pay CGST/SGST on goods arises, which is essential for GST compliance.

The article mentions that the Central or State Government may, on the recommendation of the Council, specify by notification the supply of goods that shall be treated as a continuous supply of goods, which would affect the determination of the time of supply in such cases.