Time of Taxation GST: The point at which goods or services are regarded to have been supplied is referred to as the point of taxation. We can determine the tax rate, value, and due dates for payment of taxes at the point of taxation. The point of taxation, i.e., the requirement to pay CGST / SGST, will emerge for goods and services under GST at the time of supply as determined. Time of supply for products and time of supply for services are treated separately. In this article, let’s understand everything about the Time of taxation under GST. Read on to find out more.
What is Time of Supply in GST?
The point in time when goods/services are considered supplied is referred to as the time of supply. Knowing the ‘time’ assists the seller in determining the tax payment due date. At the time of supply, CGST/SGST or IGST must be paid. Goods and services each have their own foundation for determining when they will be delivered.
Note: Section 148 of the CGST Act of 2017 confers powers on the Government to notify certain classes of registered persons and the special procedures to be followed, including the GST registration, returns, payment of taxes or administration of these people (on the recommendation of the GST Council).
How Time of Supply is Determined?
The earliest of the following dates shall determine the time of supply of goods:
- the date of invoice issuance (or the last day by which invoice should have been issuance)
OR - the date of payment receipt -whichever is earlier.
If the supplier receives an amount in excess of the invoice amount of up to Rs. 1000, the time of supply for the extra amount is the date of invoice issue (at the option of the supplier). Here for (a), the supply is presumed to have been made to the extent that the invoice or payment covers it (as the case may be).
Whereas for (b), the date of receipt of payment shall be the earlier of:
- the date on which he entered the payment in his books;
- the date on which he entered the payment in his books;
- the date on which he entered the payment in his books;
- the date on which he or when the payment is credited to his bank account.
Let’s now understand the time of supply with an example:
Example:
- (a) invoice date: 28 June 2021
- (b) payment date: 10 June 2021
- (c) date when supplier entered payment in books: 11 July 2021.
Therefore, the deadline for supply is 28 June 2021.
Time of Supply Under Reverse Charge
The recipient of goods/services, rather than the seller, are responsible for paying the tax. The time of supply in the case of reverse charge should be the earliest of the following dates:
- (a) the date of receipt of goods
OR - (b) the date of payment
OR - (c) the date immediately succeeding THIRTY days from the date of the supplier’s invoice issuing (60 days for services)
If the time of provision under (a), (b), or (c) cannot be determined, the time of supply should be the date of entry in the recipient’s books of account.
The date of payment shall be the earlier of:
- (a) The date on which the recipient recorded the payment in his books; or
- (b) The date on which the recipient entered the payment in his books.
OR - (b) the date on which his bank account is debited for the payment.
Time of Supply Under Reverse Charge Example
Now let’s understand time of supply under reverse charge with an example:
- (a) Date of receipt of goods: May 15, 2021
- (b) Date of payment: July 15, 2021
- (c) Date of invoice: June 1, 2021
- (d) Date of entry in receiver’s books: May 18, 2021
15th May 2021 is the deadline for products delivery. If the time of supply under (a), (b), or (c) could not be identified for some reason, the date of entrance would be the 18th of May 2021.
Time of Supply for Vouchers
If the supply of vouchers can be established at that point, the time of supply is
- (a) the date of issuing of the voucher
OR - (b) the date of redemption of the voucher in all other situations
When Time of Supply Cannot Be Determined
If the above provisions cannot be used to determine the time of supply, it will be
- (a) the date on which a periodic return must be filed or
- (b) the date on which the CGST/SGST is paid, in any case.
The tax collection event in the GST regime will be the earliest of the dates listed above. The different events that trigger the tax levy, such as issuing an invoice/making a payment in the case of a provision of goods/services or the completion of an event in the case of a supply of service, confirm that the government wants to collect tax as soon as possible. The ‘time’ of supply is determined by a number of factors.
As a result, monitoring and reconciling revenue based on financials and GST will be difficult for enterprises.
FAQ’s on Time of Supply of Goods under GST
Question 1.
What is the time limit for issue of invoice under GST for goods?
Answer:
An invoice must be generated before or after the supply of services. However, if the invoice is produced after the service has been provided, it must be done within the required time frame of 30 days from the date of service supply, according to invoicing guidelines.
Question 2.
What is the time of supply of service for the supply of taxable services up to Rs 1000 in excess of the amount indicated in the taxable invoice?
Answer:
If a taxable service provider gets an amount up to Rs. 1000 in excess of the invoice amount, the time of supply for the extra amount is the date of invoice issue (at the option of the supplier).
Question 3.
What is time of supply of goods in case of forward charge?
Answer:
A forward charge is a tax levy that the provider is required to collect and remit to the credit of the federal or state government. The advance charge mechanism is used to levy and collect tax on most transactions under the present tax framework (also called Direct Charge).
Question 4.
What is the point of taxation under GST for services?
Answer:
The point at which goods or services are regarded to have been rendered is referred to as the point of taxation. The point of taxation allows us to calculate the tax rate, value, and payment deadlines.