Time of Supply of Services under GST Explained

Point of taxation means the point in time when goods are deemed to be supplied or services are deemed to be provided. This crucial measure determines the rate of tax, the taxable value, and the due dates for payment of taxes. While the liability to pay CGST/SGST arises at the time of supply, different rules apply for services and goods. In this article, we focus on the time of supply for services under GST.

Time of Supply Under Normal Charge

Under normal conditions, the time of supply of services is determined as the earlier of the following:

• Date of Invoice: The date on which the invoice is issued, or the last day by which it should have been issued. (For supplies involving movement, the invoice must be issued at the time of removal; otherwise, at the time of delivery.)
• Date of Receipt of Payment: The date on which the payment is received – determined as the earlier of the date the payment is recorded in the books or the date it is credited to the bank account.

Illustration:
Date of Invoice: 15th May 2024
Date of Receipt of Payment: 10th July 2024 (recorded on 11th July 2024)
Time of Supply: 15th May 2024

Time of Supply Under Reverse Charge

Under the reverse charge mechanism, the recipient of services is liable to pay tax. Here, the time of supply is determined as the earliest of:

• Date of Payment: The earlier of the date on which the recipient records the payment in their books or the date on which the payment is debited from their bank account.
• Date Immediately After 60 Days from the Invoice Date: (For services; 30 days for goods)

Illustration:
Date of Receipt of Services (or Payment): 15th May 2024
Date of Invoice: 1st July 2024
Date Recorded in Books of Recipient: 18th July 2024
Time of Supply: 15th May 2024
If the time cannot be determined by the above, it defaults to the date of entry in the recipient’s books.

Time of Supply for Vouchers

For the supply of vouchers, the time of supply is determined as follows:

• If the supply is identifiable at the time of issuance, the time of supply is the date of voucher issuance.
• Otherwise, it is the date of voucher redemption.

When Time of Supply Cannot Be Determined

If it is not possible to determine the time of supply by the above provisions, then it will be:

• The date on which a periodical return is due, OR
• The date on which the CGST/SGST is paid.

Conclusion

In the GST regime, determining the correct time of supply for services is essential to ensure timely tax collection and accurate return filing. Multiple triggering events—such as issuing an invoice, receiving payment, or recording the transaction in books—play a role in this process. For further assistance or queries regarding GST compliance, please feel free to contact DisyTax. We’re here to help you navigate GST complexities with clarity and confidence.