Goods and Services Tax or GST is payable on supply of goods and/or services in India. However, to charge GST, one of the most important thing to find out is the point of time when GST becomes payable. Therefore, events like issuing of invoice, receipt of payment, provision of service, receipt of services in books of account need to be analysed to know the time of supply.
In this article and in subsequent posts, we will be discussing the provisions of time of supply of services under GST law in detail. If you want to know the applicable provisions related to goods then, read our article on time of supply of goods under GST law
As per GST law, the liability to pay tax on services shall arise at the time of supply, as determined in terms of the provisions of section 13. Therefore, following two things are to be discussed to understand when to pay goods and services tax on services;
- What is included and excluded in services
- Time of supply of services
How the term service is defined under GST law
As per section 2(102) service means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.
As per the explanation to section 2(102), the expression services includes facilitating or arranging transactions in securities.
Time of supply of services under GST regime
As per section 13(2) of CGST Act, 2017, the time of supply of services shall be the earliest of the following dates, namely –
- The date of issue of invoice by the supplier, if the invoice is issued within the period prescribed U/s 31 or the date of receipt of payment, whichever is earlier; or
- The date of provision of service, if the invoice is not issued within the period prescribed U/s 31 or the date of receipt of payment, whichever is earlier; or
The date on which the recipient shows the receipt of services in his books of account, in a case where the above two provision do not apply.
The date of receipt of payment shall be the date on which the payment is entered in the books of account of the supplier or the date, on which the payment is credited to the person’s bank account, whichever is earlier.
Where the supplier of taxable service receives an amount up to Rs 1000 in excess of the amount indicated in the tax invoice, 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.
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.
Time of supply on reverse charge basis
In case of time of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earlier of the following dates, namely –
- The date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or
- The date immediately following 60 days from the date of issue of invoice or any other document, by whatever name called in lieu thereof by the supplier
If it’s not possible to determine the time of supply under above two points then, the time of supply shall be the date of entry in the books of account of the recipient of supply.
In case of supply by associated enterprises, where the supplier is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of the supply or the date of payment, whichever is earlier.
If any voucher has been issued that are exchangeable for service then, the time of supply shall be –
- The date of issue of voucher, if the supplier is identifiable at that point; or
- The date of redemption of voucher, in all other cases;
What if time of supply not possible to determine
Where it’s not possible to determine the time of supply of services then, it shall;
- In a case where a periodical return has to be filed, be the date on which such return is to be filed; or
- In any other case, be the date on which the tax is paid
The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value.