What does time of supply mean under GST regime and why is it significant for the taxpayer?

Under the GST regime, time of supply refers to the time when the taxpayer is liable to pay charges under GST. It also indicates when supply of goods and services is made. The GST law provides separate time of supply for goods and services.

When will the taxpayer pay charges under GST for the services he delivers?

Taxpayer will pay charges under GST (for the services he supplies) based on the invoice of services.

  1. If the invoice is issued within the prescribed period (i.e.,  within 30 days from the date of supply), the seller will have to pay all charges either by date of issue of invoice or by the date of receipt of payment (whichever is earlier).
  2. If, however, the invoice is not issued within the prescribed period, seller will pay all charges either by the date on which service provision was completed or by the date of receipt of payment (whichever is earlier).

What does date of receipt of payment mean?

It refers to the earliest date on which the payment is entered in the books of accounts of the supplier of services or the date on which payment is credited to his bank account.

If the invoice is not issued within the prescribed period and the date of completion of service provision and the date of payment are also not ascertainable, when will the seller be required to pay the charges (i.e. how will the time of supply be determined)?

The time of supply will be the date on which the recipient of services shows the receipt of services in his books of account.

In case the taxpayer makes part advance payment for services or issues invoice for part payment, does the time of supply cover the full supply?.

No, the supply is deemed to have been made to the extent it is covered in the invoice or the part payment.

For more detailed information, visit the GST portal.

GST Portal

*The guidance provided above is as per the Model GST law (released in November 2016) and draft Rules. Please refer to GST/ CBEC website for further details.