Section 14 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.
On 21 September 2025 a television was at 28%. On 22 September it was at 18%. For a transaction that straddled the two — order placed in August, advance received in early September, goods dispatched on the 23rd, invoice raised on the 25th — which rate applies?
Section 14 answers it, and it does not answer it by asking when the supply happened.
Section 14 looks at three events — the supply, the invoice, and the payment — and asks how many fell before the rate change and how many after. Whichever side has two of the three determines the time of supply, and therefore the rate. "Date of receipt of payment" for this purpose is the earlier of the entry in the books or the credit in the bank account, with a special rule where the bank credit is more than four working days after the change.
The mechanism
Section 14 is written as two mirror sub-sections.
Sub-section (1) — goods or services supplied before the rate change:
| Invoice | Payment | Time of supply | Rate |
|---|---|---|---|
| after | after | earlier of invoice or payment | new |
| before | after | date of invoice | old |
| after | before | date of payment | old |
Sub-section (2) — goods or services supplied after the rate change:
| Invoice | Payment | Time of supply | Rate |
|---|---|---|---|
| before | after | date of payment | new |
| before | before | earlier of invoice or payment | old |
| after | before | date of invoice | new |
Read them together and the rule collapses to one sentence: the majority of the three events decides. Two events on the old side, old rate. Two on the new side, new rate.
The worked example
Order in August. Advance received 5 September 2025. Goods dispatched 23 September. Invoice raised 25 September.
- Supply: after the change.
- Invoice: after.
- Payment: before.
Two of three fall after. Sub-section (2), first row — supply after, invoice after, payment before: time of supply is the date of invoice, 25 September. New rate, 18%.
Now change one fact: the invoice was raised on 19 September, before dispatch.
- Supply: after. Invoice: before. Payment: before.
Two of three fall before. Sub-section (2), second row: time of supply is the earlier of invoice or payment — 5 September. Old rate, 28%.
The goods moved on the same day in both versions. The rate differs because the paperwork did.
The payment date, and the four-working-day proviso
Section 14 carries its own Explanation on what "date of receipt of payment" means: the date the payment is entered in the supplier's books of account, or the date it is credited to the bank account, whichever is earlier.
There is a proviso that matters at exactly this moment. Where the payment is credited to the bank account after four working days from the date of the change in rate, the date of receipt of payment is taken to be the date of credit in the bank account — the books entry does not help.
The purpose is obvious: without it, a supplier could pass a book entry on 20 September for money that actually arrived on 30 September, and manufacture an old-rate liability on the strength of a journal.
Practical rule for anyone still reconciling the September 2025 period: for payments credited after 26 September 2025 (four working days from the 22nd), only the bank credit date counts.
The direction the rate moved changes the incentive
A cut and a rise create opposite pressures.
Where the rate fell (28% to 18%, 18% to 5%): the customer wants the new rate. The supplier is generally indifferent on tax but not on the commercial argument — a customer who paid an advance at 28% and takes delivery at 18% will ask for the difference back. Section 14 decides whether they are entitled to it; the contract decides who keeps it if they are not.
Where the rate rose (12% to 18%, 28% to 40%): the supplier wants the old rate, and there is an incentive to date invoices early. That is exactly what the four-working-day proviso and the two-of-three structure are designed to constrain.
What section 14 does not do
It does not override section 31's invoice timing. An invoice for goods must still be issued before or at removal; for services, within 30 days. Section 14 tells you which rate an invoice carries — not that you may raise it whenever convenient.
It does not apply to stock. Goods already lying with a distributor on 22 September are not re-rated. The rate on the distributor's onward supply is determined by section 14 applied to that supply, independently of what was paid upstream. The credit already taken at the higher rate is not disturbed.
It does not decide continuous supply. For a continuous supply of services with periodic payment due dates, the time of supply under s.13 keys to the due date of payment, and s.14 then applies event-by-event to each such period.
It does not touch reverse charge. Time of supply under RCM is governed by s.12(3) and s.13(3); s.14 applies on top only where those events straddle the change.
Key takeaways
- Section 14 uses a two-of-three test across supply, invoice and payment.
- Two events before the change means the old rate; two after means the new rate.
- "Date of receipt of payment" is the earlier of books entry or bank credit.
- If the bank credit is more than four working days after the change, only the bank credit date counts.
- Section 14 does not re-rate existing stock or override section 31 invoicing timelines.
- For the 22 September 2025 change, the four-working-day cut-off fell on 26 September 2025.
Read next
- GST 2.0: The Two-Rate Structure Explained
- Time of Supply of Goods: When Liability Arises
- Time of Supply of Services: Rules and Examples
- GST 2.0 Transition Checklist for Businesses
Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act as amended to 31 March 2026 (ICAI Bare Law, 12th edition).