🔹 Introduction

The time of supply determines the exact point when GST liability arises. Businesses must carefully identify it to ensure timely tax payment, avoid interest, and stay compliant. The rules differ for goods and services, and also vary for forward charge, reverse charge, vouchers, and change in tax rates.

(Reference: Sec. 12 & 13 of CGST Act, Sec. 14 for rate changes, CBIC clarifications till FY 2024-25)

🔹 Time of Supply – Goods (Sec. 12)

✅ General Rule (Forward Charge)

• Earliest of the following:

  1. Date of invoice (if issued within prescribed time).

  2. Last date for issuing invoice (generally within 30 days of supply).

  3. Date of payment (entry in books or bank).

✅ Reverse Charge (RCM)

• Earliest of:

  1. Date of payment.

  2. 30 days from date of supplier invoice.

  3. If not determinable → date of entry in recipient’s books.

✅ Vouchers

• If supply identifiable → Date of issue of voucher.

• If supply not identifiable → Date of redemption.

✅ Change in Rate of Tax (Sec. 14)

• Special rules apply where supply & invoice/payment fall before & after rate change.

🔹 Time of Supply – Services (Sec. 13)

✅ General Rule (Forward Charge)

• Earliest of:

  1. Date of invoice (if issued within 30 days).

  2. Date of payment (entry in books or bank).

  3. If invoice not issued within 30 days → Date of service provision.

✅ Reverse Charge (RCM)

• Earliest of:

  1. Date of payment.

  2. 60 days from supplier invoice date.

  3. If not determinable → date of entry in recipient’s books.

✅ Vouchers

• If supply identifiable → Date of issue of voucher.

• If not identifiable → Date of redemption.

✅ Change in Rate of Tax (Sec. 14)

• Same principles as goods, applied to invoices & payments.

🔹 Special Cases

• Continuous Supply of Goods: Invoice issued on/before removal or statement of accounts.

• Continuous Supply of Services: Invoice issued as per contract (monthly/quarterly).

• Advances: GST payable at receipt of advance (for services; for goods, advances exempt except notified cases).

🔹 Practical Examples

Example 1: Trader – Forward Charge (Goods)
Invoice dated 5th May, goods supplied 10th May, payment received 20th May. Time of supply = 5th May (invoice date).

Example 2: Manufacturer – Rate Change Case
GST rate changes from 12% to 18% on 1st July. Goods supplied on 25th June, invoice on 5th July, payment on 10th July. Time of supply = 5th July (invoice date) → New rate 18% applicable.

Example 3: Service Provider – Reverse Charge
Consultant issues invoice dated 1st Aug, payment made on 25th Oct (after 60 days). Time of supply = 30th Sept (60 days rule).

Example 4: Hotel Advance (Services)
Hotel receives advance ₹50,000 on 1st March for April booking. Time of supply = 1st March → GST payable on advance.

🔹 Common Mistakes

• Not paying GST on advances for services.

• Ignoring reverse charge timelines (30/60 days).

• Wrongly applying old rate after rate change.

• Misreporting in GSTR-3B leading to mismatches.

🔹 Best Practices

• ✅ Maintain invoice & payment tracking register.

• ✅ Reconcile bank entries with GST returns monthly.

• ✅ Train staff on rate change scenarios.

• ✅ Use accounting software to auto-calculate time of supply.

🔹 FAQs

Q1. Is GST payable on advance for goods?
➡️ No, except for notified cases.

Q2. For services, what if invoice not issued within 30 days?
➡️ Time of supply = Date of service provision.

Q3. In case of reverse charge, what if payment not made within time?
➡️ 30 days (goods) / 60 days (services) rule applies.

Q4. What happens if GST rate changes mid-transaction?
➡️ Sec. 14 applies – time of supply rules determine applicable rate.

Q5. Is time of supply relevant for ITC?
➡️ Yes, ITC can be claimed only after supplier’s tax liability arises.

🔹 Conclusion

The time of supply is a cornerstone of GST compliance. Businesses must carefully apply rules for goods, services, advances, and reverse charge to avoid penalties and disputes.

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