Time of supply of services – Section 13 of CGST ACT 2017

The Time of Supply of Services is an important provision under the GST regime. Section 13 of the Central Goods and Services Tax (CGST) Act, 2017 specifies the time when the supply of services is deemed to have been made. The proper determination of the time of supply is crucial in order to determine the applicable tax rate, the point of taxation and the due date for payment of tax.

What is Time of Supply of Services?

Time of Supply refers to the point in time when a transaction is considered to have been completed and when the tax on the transaction becomes payable to the government. It is the time of supply that determines the point of taxation and the rate of tax applicable. The time of supply of services is the time when the service is deemed to have been supplied and not the time when the payment is received for the service.

How is Time of Supply of Services Determined?

The time of supply of services is determined based on the following events:

Date of issuance of invoice
Date of receipt of payment
Date of completion of service

The time of supply is determined by the earliest of the above events.

Date of Issuance of Invoice

The date of issuance of the invoice is an important event for determining the time of supply of services. If the invoice is issued within a prescribed time period, then the time of supply of services will be deemed to be the date of issuance of invoice. However, if the invoice is not issued within the prescribed time period, then the time of supply of services will be deemed to be the date of completion of the service.

Date of Receipt of Payment

The date of receipt of payment is also an important event for determining the time of supply of services. If the payment is received within a prescribed time period, then the time of supply of services will be deemed to be the date of receipt of payment. However, if the payment is not received within the prescribed time period, then the time of supply of services will be deemed to be the date of completion of the service.

Date of Completion of Service

The date of completion of service is the final event for determining the time of supply of services. If the invoice is issued and the payment is received within the prescribed time period, then the time of supply of services will be deemed to be the date of completion of the service. However, if the invoice is not issued and the payment is not received within the prescribed time period, then the time of supply of services will be deemed to be the date of completion of the service.

Exceptions to the Rule

There are certain exceptions to the rule of determination of time of supply of services. These include:

Reverse charge mechanism
Continuous supply of services
Services provided to an unregistered person
Change in rate of tax

Reverse Charge Mechanism

In case of reverse charge mechanism, the time of supply of services is deemed to be the date of payment or the date of receipt of invoice, whichever is earlier.

Continuous Supply of Services

In case of continuous supply of services, the time of supply of services is determined based on the following events:

The date of payment, if the due date of payment is ascertainable;
The date of completion of an event, if the event completion date is ascertainable;
The date of issue of invoice, if the above two points are not applicable.

Services provided to an Unregistered Person

In case of services provided to an unregistered person, the time of supply of services is the date of issue of invoice or the date of receipt of payment, whichever is earlier.

Change in Rate of Tax

In case of a change in the rate of tax, the time of supply of services is the date on which the tax rate changes.

Conclusion

Proper determination of the time of supply of services is crucial for compliance with GST regulations. It is important for businesses to keep a track of the events that determine the time of supply of services in order to ensure timely payment of tax and avoid any penalties.