Time of Supply of Service under Goods & Services Tax (GST)
We will discuss here on time of supply of service under the normal charge and under reverse charge mechanism. Time of supply is the very important topic as it will determine when the liability to pay tax on service shall arise.
According to section 13 of CGST Act 2017, the liability to pay tax on service shall arise at the time of supply as determined in accordance with the provisions of this section
TIME OF SUPPLY UNDER NORMAL CHARGE
As per sec 13(2) of CGST Act, the time of supply of service shall be the earliest of the following dates:-
If the invoice is issued within the prescribed period under section 31(2), the date of issue of the invoice by the supplier or the date of receipt of payment whichever is earlier. or If the invoice is not issued within the prescribed period under section 31(2), then the date of provision of service or the date of receipt of payment whichever is earlier.
In case the where the above clause does not apply then the date on which the recipient shows the receipt of service in his books of accounts. 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.
Provided that where the supplier of taxable service receives an amount up to one thousand rupees in excess of the amount indicated in tax invoice, then the time of supply to the extent of such excess amount shall, at the option of the said supplier be the date of issue of invoice relating to such excess amount.
It means that if any excess amount is received from the recipient up to the limit of 1000 per person then instead of paying the tax liability on advance it can be settled in next recurring bill and GST would be paid accordingly.
TIME OF SUPPLY OF GOODS UNDER REVERSE CHARGE
As per 13(3) of CGST Act 2017, in case of supplies in respect of which tax is paid or is liable to be paid on the reverse charge basis, the time of supply shall be the earlier of the following namely:-
The date of payment as 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 or The date immediately following the “Sixty days” from the date of issue of invoice or any other document by whatever name called in lieu thereof by the supplier.
Provided that where it is not possible to determine the time of supply under the above clause then the time of supply shall be the date of entry in the books of account of the recipient of the supply.
Provided further that in case of supply by an associated enterprise, 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.
TIME OF SUPPLY IN CASE OF VOUCHER
In case of supply of vouchers by a supplier, the time of supply shall be:-
The date of issue of a voucher, if the supply is identifiable at that point or
The date of redemption of voucher in all other cases
TIME OF SUPPLY FOR RESIDUAL CASE
Where it is not possible to determine the time of supply under the above provisions then the time of supply shall be:-
In a case where a periodical return has to be filed by the date on which such return is to be filled or
In any other case be the date on which the tax is paid
TIME OF SUPPLY IN CASE OF ENHANCEMENT IN VALUE IN ACCOUNT OF INTEREST/ LATE FEE FOR DELAYED PAYMENT OF CONSIDERATION
The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fees or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value.