Date of Receipt of Payment: Books or Bank, Whichever Is Earlier

Date of Receipt explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

The phrase appears in s.12(2)(b), s.13(2), s.13(3) and s.14. It carries the same meaning in each, and it is defined in an Explanation rather than in s.2 — which is why it is often overlooked.

"The date of receipt of payment" is the date on which the payment is entered in the books of account of the supplier, or the date on which the payment is credited to his bank account, whichever is earlier. Two dates, and the earlier wins. The only departure is in section 14, where a payment credited to the bank more than four working days after a change in the rate of tax is taken at the bank credit date, ignoring the books entry.

The definition

The Explanation to s.13(2) — mirrored for goods — provides:

• (i) the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment; and
• (ii) "the date of receipt of payment" shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.

Limb (i) matters more than it looks. A part payment creates a time of supply for that part only. An advance of 30% against a service contract triggers tax on 30% of the value, not on the whole.

Why the books-entry limb exists

Without it, a supplier could control the time of supply by controlling when funds were deposited. With it, the moment the receipt is recognised in the accounts — a cheque entered on receipt, a customer's remittance advice posted — the clock starts, even if the money has not cleared.

In practice the books entry is usually earlier for cheques and demand drafts, and the bank credit is usually earlier for electronic transfers that the accounts team posts from the bank statement.

Worked cases

Cheque received 28 March, entered in books 28 March, cleared 3 April. Date of receipt of payment: 28 March. The liability falls in March.

NEFT credited to bank 30 March, posted in books 4 April. Date of receipt: 30 March. The bank date is earlier.

Customer's advice received 27 March, funds credited 2 April, books entry made 2 April. Date of receipt: 2 April. An advice is not a payment.

Post-dated cheque received 20 March, dated 15 April, entered in books 15 April. Date of receipt: 15 April. A post-dated cheque is not payment until it is payable.

Payment received by an agent on 25 March, remitted to the supplier 10 April. The answer turns on whether the agent received it on behalf of the supplier. Where the agent is authorised to receive, the supplier's books should recognise it on 25 March.

Where it matters most

Services. Section 13(2) makes the date of receipt of payment one of the triggers, so a service advance is taxable on receipt. The supplier issues a receipt voucher under s.31(3)(d) and reports it in GSTR-1 Table 11A, adjusting it in Table 11B when the invoice is later issued.

Goods. Largely academic since Notification No. 66/2017-CT removed s.12(2)(b) from the computation for most suppliers. It still applies to composition dealers and suppliers of specified actionable claims. No GST on advances for goods →

Reverse charge. Section 13(3)(a) uses the date of payment as entered in the books of account of the recipient, or the date on which the payment is debited in his bank account, whichever is earlier — the mirror image, applied to the recipient. Note this is the recipient's books and the recipient's bank debit.

Rate changes. Section 14 uses the same definition, with one modification. Where the payment is credited to the bank account after four working days from the date of the change in the rate of tax, the date of receipt of payment is the date of credit in the bank account — the books entry is disregarded. That closes the obvious manipulation of back-dating a book entry to catch the old rate. Section 14 and the rate change →

The ₹1,000 excess option

A small but useful provision in the proviso to s.13(2): where the supplier of a taxable service receives an amount up to ₹1,000 in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess may, at the supplier's option, be the date of issue of invoice relating to such excess amount.

It exists so that rounding differences and small over-remittances do not create a separate advance with its own time of supply. It is an option, not a rule, and it applies to services.

Key takeaways

• Date of receipt of payment = earlier of books entry and bank credit.
• A part payment creates a time of supply only to that extent.
• For RCM, the mirror rule uses the recipient's books and bank debit.
• For section 14, a bank credit more than four working days after a rate change is taken at the bank date.
• Advances for services are taxable; advances for goods generally are not.
• Excess receipts up to ₹1,000 on a service invoice may be deferred to the invoice for that excess.

Read next

• No GST on Advances for Goods
• Time of Supply of Services: Rules and Examples
• Section 14: Which Rate Applies Across a Rate Change
• The 60-Day Rule for Reverse Charge

Disclaimer: Positions stated as on 5 September 2026, based on ICAI Background Material on GST, Volume I (2026 edition).