Time of Supply — The Moment GST Liability is Born
Time of supply determines WHEN you must account for and pay GST. Get it wrong, and you pay interest at 18% per annum from the correct date to the actual date — even if you eventually pay the full tax.
Section 12 — Time of Supply for Goods
The time of supply for goods is the EARLIEST of:
(a) Date of issue of invoice: When you issue the tax invoice — this is the most common trigger. Invoice must be issued before or at the time of removal/delivery of goods.
(b) Last date on which invoice ought to have been issued: If you fail to issue an invoice, the time of supply is the date you SHOULD have issued it (i.e., date of removal/delivery).
(c) Date of receipt of payment: When you receive payment — but only to the extent of the amount received.
In practice, for most businesses: issue invoice → time of supply = invoice date. Simple.
Advance Payments for Goods
For goods: advances received are NOT the time of supply (notification exemption since November 2017). You account for GST only when the invoice is issued. This was a major relief — earlier, even receiving Rs. 10,000 advance required GST payment immediately.
Section 13 — Time of Supply for Services
For services, it is the EARLIEST of:
(a) Date of issue of invoice (if issued within prescribed period): Invoice must be issued within 30 days of supply (45 days for banking/insurance/financial services).
(b) Date of receipt of payment: Unlike goods, for services, advance payment TRIGGERS GST liability. If you receive Rs. 5 lakh advance for a consulting project, GST is payable on that Rs. 5 lakh in the month of receipt — even before you do any work.
(c) Date of provision of service (if invoice not issued in time): If you fail to issue invoice within 30 days, the date you completed the service becomes the time of supply.
Service Advance = Immediate GST
Unlike goods (where advance payment exemption exists), for SERVICES every advance payment triggers immediate GST liability. A chartered accountant receiving Rs. 2 lakh retainer in April must pay GST on Rs. 2 lakh in April itself — even if the audit work is done in July. Many service providers miss this and face interest on delayed payment.
Section 14 — Time of Supply Under Reverse Charge
When the recipient pays GST under RCM, time of supply is the EARLIEST of:
(a) Date of receipt of goods/services
(b) Date of payment (per books or debit in bank, whichever is earlier)
(c) 30 days from date of invoice (for goods) / 60 days from date of invoice (for services)
If none of the above can be determined: the date of entry in books of the recipient.
Practical issue: Companies often receive invoices from advocates, GTAs, or other RCM suppliers late. The 30/60-day deemed supply date ensures GST is paid on time even if the invoice is delayed.
Calculation Examples
Example 1 — Goods: Manufacturer issues invoice on March 25, delivers goods on March 28, receives payment on April 10. Time of supply = March 25 (invoice date — earliest). GST reported in March GSTR-3B.
Example 2 — Services with advance: IT company receives Rs. 10 lakh project advance on June 5, issues invoice on August 20 (project completed). Time of supply = June 5 (payment received before invoice). GST on Rs. 10 lakh payable in June GSTR-3B. Balance GST (if any) payable in August.
Example 3 — RCM: Company receives legal opinion on April 15, advocate invoice dated April 20, company makes payment on May 5. Time of supply = April 15 (date of receipt of service — earliest). RCM GST payable in April GSTR-3B.
Disclaimer
This article is for general informational and educational purposes only. Consult a qualified Chartered Accountant, Tax Consultant, or GST Practitioner before acting. TaxClue Consultech Pvt Ltd accepts no liability. All drafts and templates are illustrative only.
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❓ Frequently Asked Questions
When does GST liability arise for goods?
For goods, GST liability (time of supply) arises at the earliest of: (a) date of issue of tax invoice, (b) last date the invoice should have been issued (date of removal/delivery), or (c) date of receipt of payment. In practice, for most businesses, it is the invoice date. Important relief: advance payments for goods do NOT trigger GST liability (since November 15, 2017 notification) — only the invoice triggers liability.
Does receiving advance payment for services trigger GST?
Yes — unlike goods, for services, receiving advance payment immediately triggers GST liability under Section 13. If a consultant receives Rs. 3 lakh advance in January for work to be done in March, GST on Rs. 3 lakh must be paid in January GSTR-3B. The invoice may be issued later when the service is completed, but the tax point is the advance receipt date. This catches many service providers who account for GST only on invoice date, leading to interest at 18% per annum on delayed payment.
What is the time of supply under reverse charge mechanism?
Under RCM, time of supply is the earliest of: (a) date of receipt of goods/services, (b) date of payment to the supplier, or (c) 30 days from invoice date for goods / 60 days from invoice date for services. If none can be determined, it is the date of entry in the recipient's books. The 30/60-day rule is a safeguard — even if the recipient delays payment, GST liability arises automatically after 30/60 days of invoice.
What happens if I pay GST in the wrong month due to time of supply error?
Interest at 18% per annum applies on the amount from the CORRECT date to the ACTUAL payment date. Even if you pay the full tax in the next month, interest accrues for the period of delay. For example: time of supply is March 20, but you pay in April 20 (GSTR-3B). Interest = 18% per annum on the tax amount for approximately 30 days. Additionally, incorrect reporting may attract scrutiny and potential penalty proceedings.
Is there any difference in time of supply for continuous supply of services?
Yes — for continuous supply of services (Section 2(33)), if the due date of payment is ascertainable from the contract, the time of supply is the date of payment or invoice, whichever is earlier. If not ascertainable: the date of receipt of payment. If linked to milestones: when the milestone event occurs. For telecom, banking, insurance (continuous services with periodic billing): each billing period is a separate supply with its own time of supply.
