When GST Tax Liability Arises – Time of Supply of Services and Goods

Time of supply or the point of taxation is the point of time, when GST would be required to be paid on supply of goods and services.

Time of supply or GST tax liability arises comes under the provisions of section 12 to section 14 of CGST/SGST act.

The process identifies the time period when tax payment liability arises.

It is the point when services or goods are considered to be provided or supplied.

It helps in determining tax rate, value as well as due dates related to tax payment.

Determining the Time of Supply

The time of supply for good or services is earliest of the following:

  • Invoice issue date by supplier. In case invoice not issued then last date for issuing the invoice
  • Date wherein supplier received the payment

As advance money received by supplier itself create GST liability. But GST credit will be available only on receipt of goods or services. You should keep in mind that while receiving advance you only need to issue receipt of payment. But taxable GST invoice should be raised only at the time of supply of goods or services.

You should also read the value of supply under GST.

For Example:

  • Invoice date is 15th June 2017;
  • Payment receipt date is 10th August 2017;
  • Date of supplier recording the receipt in his books is 11th August 2017;
  • In this case, time of supply shall be 15th June 2017 (as it is the earliest)

Time of Supply of Goods under the reverse-charge basis

It means the individual/ entity receiving goods is liable for payment of tax. For this, time of supply is calculated at earliest of the following dates-

Time of Supply for GoodsTime of Supply of Services
Date of goods receivedDate on which the payment made or
Date when payment was entered in account books of recipient or date when payment was debited from bank account of recipient (whichever earlier)Date immediately following 60 days from the date of issue of invoice by the supplier
Thirty days from date of invoice issue or any legal document issued instead of invoice by supplier

In case none of the above methods are viable, time of supply will be calculated as the date for transaction entry in account of recipient.

Where it is not possible to determine the time of supply under the above clauses then the time of supply shall be the date of entry in the books of account under GST of the recipient of supply.

Time of Supply for vouchers

Vouchers can be defined as an instrument which is under obligation for acceptance as part consideration or consideration for goods or services supplied. In this instrument, the goods/ services supplied or information of potential suppliers in included. It also contains the terms & conditions of usage.

Vouchers are generally used in transaction process in Indian economy. Vouchers can be for goods (vouchers for washing machine or oven) or services (voucher for facial, spa, eye consultation etc). It can also be one time or can be used multiple times. For vouchers with single purpose, the time of supply is identified as the time when the voucher is issued. For multiple purpose vouchers, the time of supply is calculated as date of voucher redemption.

What happens when one cannot determine the Time of Supply?

In such cases, where one cannot calculate the time of supply, it is determined by:

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2 thoughts on “When GST Tax Liability Arises – Time of Supply of Services and Goods”

  1. We are doing zari business. We are collected raw material from owner and after doing zari works
    we supply to them finished good.
    Monthly bills approx. 1 Lakh which we receive by cheque.
    Shall we have to register under GST ?
    We are very much confused. Please guide us how to go ahead. We have little bit idea about GST.
    Please help.

    • Hi Shaikh Alam, As you specified that your monthly bill is approx 1 lakh. It means you are collection 24 lakhs in a year. So you are liable to register under GST as the turnover limit to register under GST is Rs.20 lakhs in a year (for some states) and Rs.10 lakh (for special category states).

      You should check the following article to register online https://www.alerttax.in/gst-registration-procedure/

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