Time of Supply of
Goods: -
- Forward Charge Mechanism
Let us understand
‘Time of Supply of Goods’ under GST on Forward Charge
The liability of GST
(CGST and SGST or IGST, as applicable) will arise as shown below:
Earliest
of the following
|
Date of invoice
|
The date on which the supplier
issues the invoice.
|
Due date to issue invoice
|
The last date on which the supplier
is required to issue the invoice with respect to the supply of goods. In case
of supply of goods involving the movement goods, the invoice needs to be
issued at the time of removal. In other cases, at the time
of delivery of goods to the recipient.
|
Receipt of payment
|
The date on which payment is
received. The point of taxation in this case will be the earliest of the date
on which payment is accounted in the books of accounts of the
recipient or the date on which payment is credited to
his bank account.
|
Let us understand this
further with examples.
Scenario 1:
Date of invoice
|
Date of receipt of
payment
|
20th Aug, 2018
|
10th Sep, 2018
|
In the above scenario, the time of supply will be 20th August, 2018. Because the time of supply will be the earliest of date of
invoice or receipt of payment. In this case, the date of
invoice is earlier than the date of receipt of payment
Scenario 2:
Date of invoice
|
Date of receipt of
payment
|
5th September, 2018
|
25th August, 2018
|
In the above scenario, the time of supply will be 25th August, 2018. The
reason being, the time of supply will be the earliest of date of
invoice or receipt of payment. In this case, the date of
receipt of payment (advance receipt) is earlier than the date of invoice.
Scenario-3
In the above scenario, the time of supply will be
29th August, 2018. The reason being, time of supply will be the earliest
of date of invoice or receipt of payment. The date
of receipt of payment will be the earliest of:
·
The date on which the payment
is entered in the books of accounts or
·
The date on which the payment
is credited to the bank account.
In this case, the date on which the receipt of payment
is entered in the books of account is earlier than the date on
which payment is credited to the bank account. Hence, the time of supply
will be 29th August, 2018.
Scenario-4
Date of invoice
|
Receipt of payment entered in
the books of account
|
Receipt of payment credited to
bank account
|
Time of supply of goods
|
10th September,2018
|
5th September, 2018
|
31st August, 2018
|
31st August, 2018
|
In the above scenario, the time of supply will be
31st August, 2018. The reason being, time of supply will be the earliest
of date of invoice or receipt of payment. In this
case, the date on which payment is credited to the bank account is
earlier than the date on which payment is entered in the books of
account.
Scenario -5
Goods removed for supply
|
Receipt of payment
|
Time of supply of goods
|
25th August, 2018
|
5th September, 2018
|
25th August, 2018
|
In the above scenario, the date of invoice is not
available. Here, the time of supply will be the earliest of last day to
issue invoice and receipt of payment. The last date to
issue the invoice, in case of supply involving movement of goods, will be at
the time of removal of goods. Hence, the time of supply will be 25th August,
2018. This is because the date of removal of goods is earlier than date of
receipt of payment.
