Time of Supply of Services under CGST/SGST Act

Time of Supply in Case of Services - SEC 13

In the pursuit of discharging and calculator tax liability, it is significant to understand the date when the tax liability arises i.e. the date of the taxable event. In GST laws, this date is referred to as the Time of Supply. 

The act has provided us with sections 12, 13, and 14 to explain the relevant provisions of time of supply. Sections 12 and 13 deal with a time of supply of goods and services while section 14 deals with a time of supply in case of a change in the rate of tax. In this article, we are going to understand the Time of supply of Services in-depth for different cases and gain better understanding and clarity.

TIME OF SUPPLY FOR SERVICES - FORWARD CHARGE 

The liability of tax on services provided shall arise at the time of supply ascertained based on a provision of Sec 13 of the CGST Act. Sec 13 (2) provides that the time of supply shall be the earliest of the following:

1. The date of invoice issued by the supplier, given that the invoice is being issued under the prescribed timeline under Sec 31 of the date of receipt of payment, whichever is earlier, or
2. The date of service provision, if the invoice is not issued within the given period prescribed under Sec 31 or the date of receipt of payment, whichever is earlier, or
3. The date on which receipt records the receipt of services in his books when the above clause does not apply. 

For the above, the time limit for issuing invoices for services under Sec 31 is as under:

• Before or after the provision of services but within 30 days from the date of supply (45 days in the case of banking, insurance companies, and financial institutions)
• In case of continuous provision of services, the invoice should be issued either on or before the due date of payment before/at the time of payment receipt or on/before the completion event from which payment is linked. 
• In case of termination of supply before completion, the date of such termination. 

Where the value of the supply of taxable services is up to Rs 1,000 over the amount mentioned on the tax invoice, the time of supply of such excess shall be at the option of the supplier taken as the date of issue of invoice in respect of such excess amount. 

The date of receipt of payment is to be understood as the earlier of:

• The date on which payment is recorded in the books of the supplier, or
• Date of credit in the supplier's bank account.

TIME OF SUPPLY FOR SERVICES - REVERSE CHARGE MECHANISM 

Sec 13(3) provides that in case of the supply of services where tax is to be paid on a reverse charge basis, the time of supply shall be ascertained to be the earlier of:

1. The date of payment entered in the books of the recipient or the date of debit in the bank account, whichever is earlier, or
2. The 61st day after the date of issue of invoice or any other document in lieu thereof by the supplier. 

When it is not possible to determine the time of supply as per above stated clause, the time of supply shall be the date of entry in the books of the recipient. In case of supply by an associate enterprise located outside India, the time of supply shall be the date of entry in the books of the recipient or the date of payment, whichever is earlier. 

TIME OF SUPPLY FOR SERVICES - VOUCHERS

In case a supplier issues vouchers, the time of supply is ascertained as:

1. If the supply is identifiable at the time of issuance of a voucher, the time of supply will be the date of issue of such invoice. 
2. If the supply is not identifiable at the time of issue, then the date of redemption of the voucher will be taken as the time of supply. 

OTHER MISC CASES

Sec 13(5) provides that where it is not feasible to determine the time of supply as per the above-stated provisions, the time of supply shall be:

1. In cases where periodic returns are filed, the date of such return filing, 
2. In any other case, the date on which such tax is paid. 

Sec 13(6) provided that the time of supply to the extent it related to the surplus value of supply by way of late fee, interest, or penalty for delayed payment of any consideration shall be the date on which the supplier has received such surplus value. 

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