Time of supply of services under GST – 16 Questions Answered. The CAknowledge is striving to organise more and more workshops and lecture meets on GST. This article explains GST (Goods and service tax) Time of supply of services, GST effective date, Short term and long term impact on GST & latest updates related to Time of supply of services under GST Regime. Lets understand what is the Time of supply of goods under GST, Applicability of GST in GST Regime, GST rates, its impact on your business and latest updates about GST Act 2017. Now check more details for Time of supply of services as per CGST Act 2017..
Time of supply of services under GST – 16 Questions Answered
Q 1. How to ascertain the time of supply of services?
Ans. In terms of Section 13, the time of supply of services shall be the earliest of the following:
- (a) Date of issue of invoice; or
- (b) Due date of issue of invoice under Section 31; or
- (c) Date when the payment entry in relation to supply of services is recorded in books of accounts; or
- (d) Date on which the payment is credited to suppliers bank account.
Illustration:
| Date of invoice | December 31, 2018 | Time of supply of services shall be December 10, 2018 |
| Due date of issue of invoice under Section 31 | December 15, 2018 | |
| Advance payment received by way of cheque and the entry for receipt of payment is recorded in books of accounts |
December 10, 2018 | |
| Amount credited to bank account of supplier |
December 12, 2018 |
Q 2. What is time of supply with respect to escalation in price after the issuance of invoice (Eg: Invoice is issued for Rs. 5,000 on June 22, 2017 by the supplier. Subsequently, due to variation in price the recipient pays scenario 1: Rs. 5,500/- and scenario 2: 8,000/-)?
Ans.In terms of the proviso to Section 13(2)(b) of the CGST Act, 2017 the time of supply with respect to the amount received in excess up to Rs. 1,000/- of the amount indicated in tax invoice, the time of supply shall be the date of issue of invoice. Where the amount received exceeds Rs. 1,000/-, the time of supply of services shall be the earliest of the following (in case where the invoice is already issued):
- (a) Date on which debit note is issued; or
- (b) Date on which payment is entered in books of accounts of the supplier; or
- (c) Date on which payment is credited to the bank account.
Accordingly, the time of supply in each of the scenarios given in the example would be as follows:
Scenario 1: The time of supply of services with respect to the amount of Rs. 500/- received in excess shall be the date of invoice.
Scenario 2: The time of supply would be as follows:
| Date on which payment is entered in books of accounts of the supplier |
July 30, 2018 | of supply shall be July 28,2018 |
| Date on which payment is credited to the bank account |
July 28, 2018 |
Q 3. Whether the advance received prior to provision of service is liable to tax under GST Law?
Ans. In terms of Section 13 of the CGST Act, 2017 the time of supply of services refers to the date on which payment is received by the supplier. Accordingly, the service provider should remit the applicable taxes on such advances in the month in which the money is received in advance even otherwise the services are not supplied / provided.
Subsequently, when the invoice is issued with respect to the advance payments received earlier, the same shall be declared in the returns pertaining to the month in which the invoice is issued, by giving reference of the ‘Transaction ID’ generated at the time of remitting taxes on the advance payments (in the earlier tax periods).
Q 4. What would be the time of supply of services taxable under reverse charge mechanism?
Ans. In terms of Section 13(3) of the CGST Act, 2017, the time of supply of services for remittance of tax under reverse charge mechanism shall be the earliest of the following:
- (a) Date of payment recorded in the books of accounts;
- (b) Date of debit in bank account;
- (c) Sixty days from the date of issue of invoice or any other document by the supplier; or
- (d) Date of entry in the books of accounts of the recipient.
Q 5. Whether the date of completion of service would be relevant for determining time of supply?
Ans. Section 13 of the CGST Act, 2017 does not refer to the date of completion of provision of service. However, it refers to the due date of issuance of invoice. In terms of Section 31(2), a registered taxable person supplying taxable services shall, before or after the provision of service but within a period prescribed in this behalf, issue a tax invoice, showing the description, value, the tax payable thereon and such other particulars as may be prescribed.
Q 6. What would be the date of payment for ascertaining time of supply of services?
Ans. The ‘date of payment’ referred in provisions relating to time of supply of services shall be the earliest of the following:
- (a) date when the payment entry in relation to supply of services is recorded in books of accounts; or
- (b) date on which the payment is credited to suppliers bank account.
Q 7. Time of supply of services under reverse charge mechanism where the supplier of service is associated enterprises?
Ans. In case of associated enterprises located within India, the time of supply in terms of Section 13(3) shall be the earliest of the following:
(a) Date of payment as per books of accounts; or
(b) Date on which payment is debited in the bank account of the supplier; or
(c) Sixty days from the date of issuing invoice by the supplier; or
(d) Date of entry in the books of accounts of the recipient.
Where associated enterprises is located outside India, the time of supply shall be the earliest of the following dates:
(a) Date of entry in the books of accounts of the recipient; or
(b) Date of payment
| Particulars | Non-associated enterprises |
Associated Enterprises |
|---|---|---|
| Date on which payment is entered in books of accounts |
December 15, 2017 | December 15, 2017 |
| Date on which payment is debited to bank account |
December 17, 2017 | December 17, 2017 |
| Date of issuance of invoice | December 10, 2017 | December 10, 2017 |
| Sixty days from the date of issuing invoice |
February 09, 2018 | February 09, 2018 |
| Date of entry in the books of accounts of the recipient |
December 10, 2017 | December 10, 2017 |
| Time of supply | December 10, 2017 | December 15, 2017 |
Q 8. What does associated enterprises referred to in Section 13(3) of the CGST Act, 2017 mean?
Ans. In terms of Section 2(12), the ‘associated enterprises’ shall have the meaning assigned to it in Section 92A of the Income Tax Act, 1961.
Q 9. What would be the ‘due date of issuance of invoice’ with reference to the provisions
relating to time of supply of services?
Ans. A registered taxable person supplying services, in terms of Section 31(2) shall issue the tax invoice before or after the provision of service but within a period prescribed in this behalf. Accordingly, the last date within which the invoice should be issued will be the ‘due date of issuance of invoice’. As per the draft Invoice Rules, 2017 the time limit for issuing a tax invoice is thirty days from the date of provision of service.
Q 10. What would be the time of supply in case of works contract?
Ans. In terms of entry (a) to clause 6 of schedule II, the works contract in relation to immovable property under the GST regime should be treated as supply of service. Accordingly, in terms of Section 13, the time of supply of services shall be the earliest of the following:
- (a) Date of issue of invoice; or
- (b) Due date of issue of invoice under Section 31; or
- (c) Date when the payment entry in relation to supply of services is recorded in books of accounts; or
- (d) Date on which the payment is credited to suppliers bank account.
Q 11. What would be the time of supply where composite supply involves supply of services as principal supply?
Ans. The general provisions relating to time of supply of services are applicable where composite supply involves services as principal supply. In terms of Section 13, the time of supply of services shall be the earliest of the following:
(a) Date of issue of invoice; or
(b) Due date of issue of invoice under Section 31; or
(c) Date when the payment entry in relation to supply of services is recorded in books of accounts; or
(d) Date on which the payment is credited to suppliers bank account.
Q 12. Time of supply in case of mixed supplies?
Ans.In terms of Section 2(74) of the CGST Act, 2017 ‘mixed supply’ is defined to mean two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. The illustration appended to the definition of ‘mixed supply’ reads as follows:
A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately.
Section 8(b) provides that the mixed supply whether involves supply of goods or services shall be ascertained on the basis of a particular supply forming part of the mixed supply which attracts highest rate of tax. In other words, the mixed supply, if involves supply of services liable to tax at the higher rates than any other goods or services, such mixed supply would qualify as supply of services and accordingly the provisions relating to time of supply of services would be applicable. Alternatively, the mixed supply, if involves supply of goods liable to tax at the higher rates than any other goods or services, such mixed supply would qualify as supply of goods and accordingly the provisions relating to time of supply of services would be applicable.
Eg: During an exhibition, the package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices are supplied by the organizer of exhibition. This would qualify as mixed supply since exhibition of services and other goods are supplied in conjunction. The rate of tax applicable (presumed) to each of the goods and services:
| Exhibition services | 18% |
| Dry fruits and fruit juices | 5% |
| Canned foods, sweets, chocolates, cakes and aerated drink | 12% |
| Nature of supply (highest rate) | Supply of services |
Q13. Time of supply in case of continuous supply of services?
Ans. ‘Continuous supply of services’ in terms of Section 2(32) of CGST Act, 2017 means supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and includes supply of such service as the Central or a State Government may, whether or not subject to any condition, by notification, specify. Accordingly, in terms of Section 13, the time of supply of services shall be the earliest of the following:
(a) date of issue of invoice; or
(b) due date of issue of invoice under Section 31; or
(c) date when the payment entry in relation to supply of services is recorded in books of accounts; or
(d) date on which the payment is credited to suppliers bank account.
Q 14. Time of supply where services are supplied online?
Ans. The CGST Act, 2017 does not provide separate provisions for ascertaining the time of supply of service where such services are supplied online. Accordingly, in terms of Section 13, the time of supply of services shall be the earliest of the following:
(a) Date of issue of invoice; or
(b) Due date of issue of invoice under Section 31; or
(c) Date when the payment entry in relation to supply of services is recorded in books of accounts; or
(d) Date on which the payment is credited to suppliers bank account.
Q 15. Time of supply of services in case of import of services?
Ans. In terms of Section 7(1) of the CGST Act, 2017 supply includes import of services for a consideration whether or not in the course or furtherance of business. Accordingly, the recipient of services would be liable to pay tax on import of service. The CGST Act, 2017 does not provide separate provisions for ascertaining the time of supply in case of import of services. Accordingly, in terms of Section 13 shall be the earliest of the following:
(a) Date of issue of invoice; or
(b) Due date of issue of invoice; or
(c) Date on which supplier receives the payment; or
(d) Date on which payment is entered in books of accounts of the supplier; or
(e) Date on which payment is credited to the bank account.
Q 16. Time of supply in case of addition in value by way of interest, late fee or penalty?
Ans. In terms of Section 13(6) of the CGST Act, 2017 the date on which the supplier receives interest, penalty or late fee which forms part of value will be the time of supply. However, reference can also be drawn to proviso to Section 13(2) where such additional value is received in the form of interest, penalty and late fee. Accordingly, the time of supply with respect to the amount received in excess up to Rs. 1,000/- of the amount indicated in tax invoice, the time of supply shall be the date of issue of invoice. Where the amount received exceeds Rs. 1,000/-, the time of supply of goods shall be the earliest of the following (in case where the invoice is already issued):
- (a) Date on which payment is entered in books of accounts of the supplier; or
- (b) Date on which payment is credited to the bank account.
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