Under Goods and Services Tax (GST) regulations, identifying the "time of supply" is crucial for every transaction involving goods and services. This concept defines the specific moment when goods or services are considered supplied, thus establishing when a taxpayer's liability to remit taxes arises. This article focuses on the time of supply for goods under GST, while a separate resource details the rules for services.

Time of Supply Under the Normal Charge Mechanism

For supplies falling under the normal charge mechanism, the time of supply for goods is determined by the earlier of two dates:

• The date the invoice is issued (or the last permissible date for invoice issuance). If goods are moved, the invoice must be issued at the time of removal. For other scenarios, it must be issued when goods are delivered to the recipient.
• The date the payment is received.

Important Considerations:

• If a supplier receives an amount up to Rs. 1,000 beyond the invoice value, they have the option to treat the invoice issue date as the time of supply for this excess amount.
• The supply is considered made only to the extent covered by the invoice or payment, whichever applies.
• The payment receipt date is the earlier of:
  1. The date the payment is recorded in the supplier's books of account.
  2. The date the payment is credited to the supplier's bank account.

Example:

• Invoice Date: May 15, 2021
• Payment Receipt Date: July 10, 2021
• Date supplier recorded payment: July 11, 2021

In this scenario, the time of supply is May 15, 2021, as it is the earlier date.

Time of Supply Under the Reverse Charge Mechanism

Under the reverse charge mechanism, the tax liability shifts from the supplier to the recipient of goods or services. For goods supplied under reverse charge, the time of supply is the earliest of these dates:

• The date when the goods are received by the recipient.
• The date when the payment is made.
• The date immediately following thirty days from the supplier's invoice issue date (for services, this period is sixty days).

If the time of supply cannot be determined using any of the above criteria, then it defaults to the date the recipient records the entry in their books of account.

Note on Payment Date: The payment date for clause (b) is the earlier of:

• The date the recipient records the payment in their books.
• The date the payment is debited from the recipient's bank account.

Example:

• Goods received: May 15, 2021
• Payment made: July 15, 2021
• Invoice issued: June 1, 2021
• Entry in receiver's books: May 18, 2021

The time of supply for goods in this example is May 15, 2021. If the time of supply could not be ascertained through the initial conditions (a), (b), or (c), then it would be May 18, 2021 (the date of entry in the receiver's books).

Time of Supply for Vouchers

When vouchers are supplied, their time of supply is determined as follows:

• If the specific supply associated with the voucher is identifiable at the time of issue, then the time of supply is the voucher's issue date.
• In all other situations where the supply is not identifiable upfront, the time of supply is the date the voucher is redeemed.

Scenarios Where Time of Supply Cannot Be Identified

If the time of supply cannot be established using the previously outlined provisions, it is determined by:

• The date when a periodical tax return is due for filing.
• Alternatively, the date when the tax is actually paid, if no specific return filing date applies.

The GST framework is designed to ensure tax collection occurs at the earliest possible point. This is reflected in the various events—such as invoice issuance, payment processing for goods and services, or event completion for services—that trigger the tax levy. Due to the diverse criteria for pinpointing the time of supply, businesses frequently encounter complexities in reconciling their financial records with their GST obligations.