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Published on:
February 25, 2023
By
Paramita

Time of Supply of Services under GST Explained

Goods and Services Tax (GST) is a comprehensive indirect tax on the supply of goods and services in India. It is a destination-based tax that is levied at every stage of the supply chain, from manufacturer to the final consumer. One of the key aspects of GST is the determination of the time of supply, which is important in determining when a taxpayer is required to pay tax and file returns.

In this article, we will discuss the concept of time of supply under GST and how it is determined for services.

Understanding Time of Supply

Time of supply refers to the point in time when a transaction is considered to have taken place for tax purposes. It is the point in time when the taxpayer is required to pay tax and file returns. In the case of services, time of supply is determined differently than in the case of goods.

According to Section 13 of the Central Goods and Services Tax (CGST) Act, 2017, the time of supply of services shall be the earlier of the following dates:1. The date of issue of invoice by the supplier, if the invoice is issued within the prescribed time period2. The date of receipt of payment by the supplier3. The date of provision of service, if the invoice is not issued within the prescribed time period or the payment is not received within the prescribed time period

Let us discuss each of these in detail.

Date of Issue of Invoice

The date of issue of invoice is the date on which the supplier issues an invoice to the recipient of the service. This date is important in determining the time of supply of services, as it is used to calculate the due date for payment of tax and filing of returns.

In the case of services, the time limit for issuing an invoice is 30 days from the date of provision of service. If the invoice is not issued within this time period, the time of supply will be the date of provision of service.

Date of Receipt of Payment

The date of receipt of payment is the date on which the supplier receives the payment for the service from the recipient. This date is important in determining the time of supply of services, as it is used to calculate the due date for payment of tax and filing of returns.

In the case of services, the time limit for receipt of payment is 45 days from the date of provision of service. If the payment is not received within this time period, the time of supply will be the date of receipt of payment.

Date of Provision of Service

The date of provision of service is the date on which the service is actually provided by the supplier to the recipient. This date is important in determining the time of supply of services, as it is used to calculate the due date for payment of tax and filing of returns.

In the case of services, if the invoice is not issued within 30 days from the date of provision of service or the payment is not received within 45 days from the date of provision of service, the time of supply will be the date of provision of service.

Example

Let us understand the concept of time of supply of services with the help of an example.

Suppose a company provides consultancy services to a client on 1st June 2021. The company issues an invoice to the client on 15th June 2021 and receives the payment on 30th June 2021. In this case, the time of supply of services will be 15th June 2021, as it is the earlier of the dates of issue of invoice and receipt of payment.

Conclusion

In conclusion, the time of supply of services under GST is an important concept that determines the due date for payment of tax and filing of returns. It is determined based on the date of issue of invoice, date of receipt of payment, and date of provision of service. Taxpayers must ensure that they comply with the provisions of the law to avoid any penalties or interest.

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Updated on:
March 16, 2024