Impact of Revised GST Rates with respect to Time of Supply u/s 14: All You Need To Know

Time of supply is a crucial element in tax as it helps us to determine when to pay tax and file for GST returns. Time of supply is the point of time in which goods or services are supplied to the taxpayer, it also indicates the time at which the taxpayer is liable to pay taxes or the time at which a charging event has occurred. Section 14 of Goods and Services Tax Act, 2017 has enacted separate provisions to ascertain time of supply of goods and time of supply of services.

Time of supply for Goods is the earliest of :-

1. Date of Issue of Invoice
2. Date of receipt of payment or advance
3. Last date in which invoice should have been issued.

Time of Supply for services is the earliest of :-

1. Date of Issue of Invoice
2. Date of receipt of payment or advance
3. If invoice is not issued then date of supply of service.

• Supply of Goods

If the supply involves movement of goods from one location to another then invoice should be issued at the date of removal. If there are no movements involved then time of supply is considered to be the date of delivery of goods to the recipient. For continuous supply of goods the date of completion of the event is considered as the time of supply. In cases where goods are supplied to an unregistered recipient and he/she is liable to pay tax as per reverse charge mechanism then the date of receipt is the time of supply.

To read more about reverse charge read:- The Reverse Charge Mechanism in GST: A Must-Know for Businesses

• Supply of Services

Date of issue of invoice is used to determine the date of supply for services, in case no invoice was issued beyond the specified period then the time of supply is taken as the date of receipt. In case of continuous supply of services the date of completion of the event is regarded as the time of supply.

Tax Rate Change and Time of Supply

Tax Rate change impact time of supply, there are 2 ways in which tax rate changes impact time of supply and they are –

• Provided that the date of receipt of payment shall be the date of credit in the bank account, and if such a credit in the bank account is after four working days from the date of change in the rate of tax.

Invoice Supply

GST invoices act as an evidence of transaction between buyer and seller, it helps in tracking flow of goods and services, which in turn ensures that all the goods and services are taxed

Precisely. Moreover, the GST Regulations Act of 2017 mandates registered suppliers to issue tax invoices to customers.

Tax invoices containing tax rates are issued by seller to the buyer in case of transactions, and composition dealers are barred from issuing tax invoices as they are obliged to pay taxes out of pocket therefore they shouldn’t recover GST from customers.

Invoice Shall be issued before or after the supply of service, but within the prescribed period.

According to Section 31(1) tax invoices should be issued

• Before or at the time of removal of goods or services for to the recipient [if movement is possible],or
• While making the goods or services available, or during delivery [if movement is not possible]

Further Section 31(4) states that In case of continuous supply of goods where successive payments are involved the invoice shall be issued before or at the time each payment is issued or received.

Conclusion

Buyers are often defrauded by sellers when it comes to levying taxes, lack of awareness on Tax laws and legal aids available incase of deceit. Therefore it is important for consumers to edify themselves on such topics.

Time of supply and tax invoice are indicative of the date in which taxes are levied upon the goods or services sold. In case payment and invoice are issued on different dates then time of supply will be earliest of these dates.

For example X purchased some goods from Y(seller) on 7th of May and Y issued the invoice on May 7th itself, X made the payment on 21st July. Here time of supply will be May 7th.

Time of supply and tax invoice are determinantal for accounting the tax liability.

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