Time of Supply Goods under GST

• Goods and Services Tax (GST)
• ||
• February 26, 2025

Under GST, the Time of supply concept helps to determine the point when goods and services are considered as supplied or provided, i.e., the time when the taxpayer is liable to pay the taxes. In simple terms, it determines the time when the tax payment is liable to make the payment of taxes.

The time of supply of goods and services is determined by two different sections of the CGST Act: Section 12 deals with the time of supply of goods, and Section 13 deals with the time of supply of services

What is the Time of supply?

Under GST, the time of supply is the point in time when goods or services are considered supplied. This determines when the taxpayer is liable to pay GST. The time of supply is critical to deciding tax payment, which impacts cash flow and compliance risk.

Definition of Goods

As per Section 2(52) of the CGST Act, “goods” means every kind of movable property other than money and securities. However, this definition includes:

• Actionable Claims: Legal rights to claim money or property from another person
• Growing Crops and Grass: These are considered goods even before they are harvested
• Things Attached to or Forming Part of the Land: Items like minerals, timber, or other natural resources that are part of the land but are intended to be extracted or severed under a contract of supply

Exclusions from the definition of goods include:

• Money: All forms of currency.
• Securities: Financial instruments such as shares, bonds, debentures, etc

Definition of Services

“Services are anything other than goods, money, or securities,” which encompasses a broad range of activities. This definition is comprehensive and includes any transaction not involving goods, money, or securities.

I. Time of Supply for Goods (Section 12)

(a) Forward Charge under Section 12(2)

According to Section 31(1) of the CGST Act, a registered person under Section 22 or 24 is required to issue an invoice before or at the time of –

• Removal of goods for supply to the recipient, where the supply involves the movement of goods or
• Delivery of the goods or making them available to the recipient
• The date when the supplier receives payment regarding this supply

However, according to Notification number 66/2017-Central Tax dated 15 November 2017, the supplier of goods must make the tax payment upon the issuance of the invoice only under section 12(2) (a).

(b) Reverse Charge under Section 12(3)

Reverse Charge indicates that the responsibility to pay tax is on the recipient of the supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply.

E.g. — XYZ Pvt Ltd, a registered entity, purchases raw cashews worth ₹50,000 from a farmer, an unregistered person. Since the farmer doesn’t charge GST, XYZ Pvt Ltd is responsible for paying GST under RCM.

(c) Supply of Vouchers under Section 12(4)

A voucher is a prepaid payment instrument that can be used to buy physical products. For example, a retail store issues a gift voucher to purchase anything worth Rs. 1000 from the store; in this case, the supply is not identifiable, so the date of redemption of the voucher will be considered the time of supply.

(d) Other Cases under Section 12(5)

Time of supply when provisions of subsection 2/3/4 are not applicable shall be determined as follows-

Time of supply under section 12(5)
Time of supply when provisions of sub section 2/3/4 are not applicable shall be determined as follows-

1.  In case where periodical return is to be filed, the TOS shall be the date of filing such return; or,
2. In any other case, TOS shall be the date of payment of tax.

Interest, Late Fees, or Penalties (Section 12(6))

Time of supply, in case there is an addition to 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 additional amount.

Thus, for additional charges on delayed payments, the time of supply is the date on which the supplier receives such amounts.

II. Time of Supply of Services under Section 13 of the CGST Act

(a) Forward Charge under Section 13(2)

Note: If a service provider receives up to ₹1,000 in excess of the invoice amount, the time of supply for this excess amount can be the date of invoice issuance.

“The date of receipt of payment”

(b) Reverse Charge under Section 13(3)

The reverse charge mechanism is also applicable to services, such as Goods Transport Agencies (GTA):

GTA Services involve road transport of goods. Under GST, the recipient (usually a business) must pay the tax via reverse charge. The GST rate is 5% or 12%, depending on conditions.

Provided that where it is not possible to determine the time of supply under clause (a) or clause (b), the time of supply shall be the date of entry in the books of account of the recipient of supply:

Provided further that in case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply shall be

(c) Other Cases under Section 13(5)

In any other case, the time of supply will be as follows:

Issuance of Invoices for Services (Section 31)

The invoice should be issued either way in case of a continuous supply of services:

1. On/ before the due date of payment – where the due date of payment is ascertainable from the contract or
2. Before/ at the time when the supplier of service receives the payment – where the due date of payment is not known
3. On/ before the date of completion of the milestone event – where the payment is linked to the completion of an event

Change in Tax Rate in respect of supply of goods or services (Section 14)

1. Issuance of invoice
2. Supply of goods/services
3. Receipt of payment

•   If two out of three (a, b, or c) occur before the rate change, the old rate
•   If two out of three happen after the rate change, the new rate

Examples:

Conclusion: The “Time of Supply” under GST plays a pivotal role in determining when taxes are due. Understanding and applying these provisions accurately ensures timely compliance and avoids penalties or cash flow disruptions.

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