Time of Supply Under GST for Goods and Services

Short answer: The Time of Supply (ToS) under GST is the precise point when a transaction is deemed to have occurred for tax purposes. This determines the tax period in which GST liability must be reported and paid. For goods, it is generally the date of the invoice. For services, it is the earlier of the invoice date or the payment date. Correctly identifying the ToS is fundamental for GST compliance and accurate tax payment.

What is the Time of Supply under GST?

This is the specific point in time when the liability to pay GST arises. The GST laws, primarily the Central Goods and Services Tax (CGST) Act, 2017, provide clear rules to pinpoint this moment. Think of it as the 'taxable event' date. It dictates which month's GSTR-1 and GSTR-3B return should include a particular transaction and when the corresponding tax must be deposited with the government. Getting this wrong leads to interest and penalties for delayed payment.

How is the Time of Supply determined for goods?

The Time of Supply for goods under a forward charge (the normal case where the supplier pays GST) is determined by the date of the invoice. As per Section 12(2) of the CGST Act, the ToS is the earlier of:

1. The date of issue of the tax invoice by the supplier.
2. The last day on which the supplier is required to issue the invoice under Section 31 (e.g., at the time of removal of goods).

Notably, GST is not payable on advances received for the supply of goods. A government notification (No. 66/2017-Central Tax) exempted suppliers of goods from paying tax on advance payments. The liability crystallises only when the invoice is issued.

What is the Time of Supply for services?

The Time of Supply for services is generally earlier than that for goods because it includes the date of payment. According to Section 13(2) of the CGST Act, the ToS for services is the earliest of the following dates:

• If the invoice is issued within the prescribed time (30 days from the provision of service): The date of issue of the invoice or the date of receipt of payment, whichever is earlier.
• If the invoice is not issued within the prescribed time: The date of provision of the service or the date of receipt of payment, whichever is earlier.
• If the above do not apply: The date on which the recipient shows the receipt of services in their books of account.

This means if you receive an advance payment for a service, GST becomes due on that advance in the month it is received, even if the service will be completed or invoiced later. You can learn more about this in our guide on GST on advance received.

Time of Supply Comparison: Goods vs. Services (Forward Charge)

Condition	Time of Supply for Goods (Sec 12)	Time of Supply for Services (Sec 13)
Primary Rule	Date of invoice or the last date for issuing the invoice.	Earlier of the date of invoice or date of payment.
Invoice Issued Late?	Liability is fixed to the last date the invoice should have been issued.	Liability shifts to the earlier of the date of provision of service or date of payment.
Advance Payment	GST is not payable on advances received.	GST is payable on advances received.

What about Time of Supply under Reverse Charge Mechanism (RCM)?

When GST is payable under the Reverse Charge Mechanism (RCM), the recipient of the goods or services is liable to pay the tax directly to the government. The rules for determining ToS are different in this case.

• For Goods (Sec 12(3)): The ToS is the earliest of:
  1. The date of receipt of goods.
  2. The date of payment.
  3. The date immediately following 30 days from the supplier's invoice date.
• For Services (Sec 13(3)): The ToS is the earliest of:
  1. The date of payment.
  2. The date immediately following 60 days from the supplier's invoice date.

Worked example

Let's consider 'Bengaluru Webcrafters', a web development firm, working for 'Mysore Agro Foods'.

• Agreement: A website revamp for ₹4,00,000 + 18% GST (₹72,000).
• Advance Payment: Mysore Agro Foods pays ₹1,00,000 on 20th September 2026.
• Project Completion: Bengaluru Webcrafters completes the project on 15th October 2026.
• Final Invoice: They issue the final invoice for ₹4,00,000 on 18th October 2026 (within 30 days of completion).
• Final Payment: The remaining ₹3,00,000 is received on 5th November 2026.

Here's how to determine the Time of Supply:

1. For the ₹1,00,000 advance: The payment was received on 20th September 2026. Since this is a service, the ToS is the date of receipt of payment (as it's earlier than the invoice date). So, GST of ₹18,000 (18% of ₹1,00,000) is liable to be paid with the GSTR-3B for September 2026, due by 20th October 2026.

2. For the remaining ₹3,00,000:

   • Invoice Date: 18th October 2026
   • Payment Date: 5th November 2026
   • The ToS is the earlier of the two, which is 18th October 2026.
   • Therefore, GST of ₹54,000 (18% of ₹3,00,000) is liable to be paid with the GSTR-3B for October 2026, due by 20th November 2026.

Bengaluru Webcrafters must correctly split the GST liability across two tax periods based on the Time of Supply rules.

Common mistakes

1. Ignoring GST on advances for services: Many businesses mistakenly believe that GST is only due when an invoice is raised. For services, receiving an advance payment triggers GST liability immediately.
2. Applying service rules to goods: Paying GST on advances for goods is a common error. This practice was discontinued in late 2017 but can still cause confusion, leading to unnecessary blockage of working capital.
3. Incorrectly determining RCM liability date: Businesses often wait to receive an invoice from an unregistered supplier to pay RCM. The rules are based on payment date or a fixed number of days from the invoice, making timely compliance critical.
4. Mismatch in reporting dates: Declaring a supply in one month's GSTR-1 filing but paying the tax in the subsequent month's GSTR-3B creates a mismatch that can trigger scrutiny and notices from the GST department.
5. Not factoring in the 'date of provision of service': If an invoice is significantly delayed for a service, the ToS defaults to the date the service was actually rendered, which can be easily overlooked.

How SP & SC helps

Navigating the nuances of Time of Supply, especially with complex transactions involving advances, RCM, or continuous supplies, can be challenging. SP & SC Legal and Taxation Services provides expert GST consultation and compliance management. We review your billing cycles, accounting practices, and transaction flows to ensure you determine the Time of Supply accurately. Our team helps you structure transactions for optimal cash flow, maintain compliant records, and file accurate GST returns, preventing costly errors and future litigation.

Frequently asked questions

H3: Do I need to pay GST on advance payments for goods?

No. As per Notification No. 66/2017-Central Tax, suppliers of goods are not required to pay GST on receiving advance payments. The tax liability for goods arises only at the time of issuing the invoice.

H3: What is the 'date of payment' for GST purposes?

The 'date of payment' is considered to be the earlier of the date the payment is recorded in the supplier's books of account or the date the payment is credited to their bank account.

H3: How does a continuous supply of services affect the Time of Supply?

For a continuous supply of services (like an annual maintenance contract), the Time of Supply is determined based on payment milestones or invoice dates specified in the contract. If no dates are specified, the ToS is the date of receipt of payment or issue of invoice, whichever is earlier, at the end of each period for which payment is due.

H3: What if an invoice is issued late for a service?

If you issue an invoice more than 30 days after providing a service, the Time of Supply is no longer the invoice date. It becomes the earlier of the date the service was actually provided or the date you received payment. This can pre-pone your tax liability.

H3: What is the Time of Supply for vouchers?

If the supply is identifiable when the voucher is issued (e.g., a voucher for a specific product), the ToS is the date of issue of the voucher. If the supply is not identifiable (e.g., a general gift card for any item in a store), the ToS is the date the voucher is redeemed.

Get a fixed-fee quote

Incorrectly determining the Time of Supply can lead to interest on delayed payments and scrutiny from tax authorities. For a clear strategy and robust compliance framework, share your documents with us. We provide a written fixed-fee quote after our initial review. Contact SP & SC or WhatsApp us at +91 90356 74566. Our team of CAs and lawyers handles all GST compliance and advisory matters, end to end.