Time of Supply of Goods

Time of Supply of Goods: -

1. 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.