Time of Supply: formula sheet

Key formulas

Forward charge: goods

Time of supply = earlier of (a) date of invoice issue, or last date by which invoice must be issued under Section 31, and (b) date supplier receives payment

Section 12(2). Pick the earlier date. Applies to the extent of the invoice or payment.

Date of receiving payment

Date of payment = earlier of (date entered in supplier's books) and (date credited to supplier's bank account)

Explanation 2 to Section 12(2).

Excess payment up to ₹1,000

Excess received up to ₹1,000 over the invoice amount: time of supply for that excess = date of invoice for it, at supplier's option

Proviso to Section 12(2). Applies only to the excess, and only up to one thousand rupees.

Reverse charge: goods

Time of supply = earliest of (a) date of receipt of goods, (b) date of payment (earlier of books entry and bank debit), (c) day after 30 days from the supplier's invoice date

Section 12(3). If none can be determined, the date of entry in recipient's books.

Vouchers

Date of issue if supply is identifiable then; otherwise date of redemption

Section 12(4).

Residual rule

Periodical return case: due date of return; any other case: date tax is paid

Section 12(5). Only where sub-sections (2), (3) or (4) cannot fix the date.

Interest, late fee, penalty

Time of supply of the addition in value = date supplier receives it

Section 12(6).

Basic rule, Section 12(2)

Time of supply = earlier of (date of invoice or last date to issue invoice) and (date of receipt of payment)

Applies to supply of goods where the supplier pays tax (forward charge).

Date of receipt of payment

Earlier of (date entered in books of supplier) and (date credited to supplier's bank account)

Explanation 2 to Section 12(2).

Extent rule

Supply is deemed made only to the extent covered by the invoice or the payment

Explanation 1. Part payment fixes the time of supply for that part only.

Excess up to ₹1,000

Excess received up to ₹1,000 over the invoice amount: time of supply of the excess = date of invoice for the excess, at the supplier's option

Proviso to Section 12(2). It does not apply to excess above ₹1,000.

Interest, late fee, penalty

Time of supply of such addition = date the supplier receives it

Section 12(6).

Time of supply, goods, reverse charge (Section 12(3))

Time of supply = earliest of (a) date of receipt of goods; (b) date of payment; (c) date immediately following 30 days from date of invoice

Applies only when tax is paid or liable to be paid on reverse charge.

Date of payment for clause (b)

Date of payment = earlier of (date entered in recipient's books) and (date debited in recipient's bank account)

It is the recipient's books and bank, not the supplier's.

30-day date for clause (c)

Clause (c) date = invoice date + 31 days

The date 'immediately following thirty days'. An invoice dated 1 July gives 1 July + 30 days = 31 July, and the date is 1 August.

Fallback proviso

If (a), (b) and (c) cannot be determined, time of supply = date of entry in recipient's books of account

Rarely used. Check that an invoice exists before applying it.

Voucher: supply identifiable

Time of supply = date of issue of voucher

Applies if the supply is identifiable at the point of issue (Section 12(4)(a)).

Voucher: supply not identifiable

Time of supply = date of redemption of voucher

Applies in all other cases (Section 12(4)(b)).

Residual case with periodical return

Time of supply = date on which the return is to be filed

Only if the time cannot be found under sub-section 2, 3 or 4 (Section 12(5)(a)).

Residual case, any other

Time of supply = date on which tax is paid

Section 12(5)(b). Use when no periodical return has to be filed.

Interest, late fee, penalty

Time of supply = date on which supplier receives the addition in value

Applies to the extent of the addition for delayed payment of consideration (Section 12(6)).

Value link

Value of supply includes interest, late fee or penalty for delayed payment

Section 15(2)(d). Section 12(6) gives the timing of that same amount.

Goods, forward charge (section 12(2))

Time of supply = earlier of (date of invoice or last date to issue it) and (date of receipt of payment)

Supply is treated as made only to the extent covered by the invoice or the payment.

Date of receipt of payment

Earlier of (date entered in supplier's books) and (date credited to bank account)

This is the general rule under the Explanation to sections 12 and 14. The proviso to section 14 adds one exception for rate-change cases. Where a clause of section 14 turns on the date of receipt of payment, and the bank credit falls after four working days from the date of change in rate, the credit date is taken as the date of receipt. In every other case, the earlier of the books entry and the bank credit applies.

Goods sent on approval (invoice due date)

Invoice due by the earlier of (date it becomes known that supply has taken place) and (six months from date of removal)

This is a section 31 invoicing rule. Section 31 is not reproduced in the text supplied for this page, so confirm the wording in the Act or ICSI material. The due date is then used as the 'last date to issue invoice' in section 12(2)(a), and section 12(2) is applied as usual.

Rate change: supply before change

(i) Invoice and payment both after change: earlier of payment date and invoice date. (ii) Invoice before, payment after: invoice date. (iii) Payment before, invoice after: payment date.

Section 14(a). Where all three events fall before the change, the ordinary section 12 rule applies and the old rate governs.

Rate change: supply after change

(i) Invoice before, payment after: payment date. (ii) Invoice and payment both before: earlier of the two. (iii) Invoice after, payment before: invoice date.

Section 14(b).

Goods, reverse charge (section 12(3))

Time of supply = earliest of (date of receipt of goods), (date of payment: books or bank debit, whichever is earlier), (day immediately following 30 days from date of supplier's invoice)

If none can be determined, it is the date of entry in the recipient's books. For services, the invoice period is 60 days, not 30.

Residual rule (section 12(5))

Return filers: date on which the return is to be filed. Others: date on which tax is paid.

Use only when sub-sections (2), (3) and (4) cannot fix the date.

Quick revision

• Liability to pay tax on goods or services arises at the time of supply, fixed under section 12 or 13.
• Goods, forward charge: earlier of invoice date (or last date to issue invoice) and date of receipt of payment.
• Services, forward charge: earliest of the dates in section 13(2), depending on whether the invoice is issued within the prescribed period.
• Supply is deemed made to the extent covered by the invoice or the payment.
• Receipt of payment by the supplier means the earlier of the book entry date and the bank credit date.
• Supplier may treat an excess receipt up to ₹1,000 over the invoice amount as supplied on the date of invoice for that excess.
• Goods, reverse charge: earliest of receipt of goods, payment date (books or bank debit, earlier), and the day after 30 days from the supplier's invoice.
• Services, reverse charge: earlier of payment date, the day after 60 days from the supplier's invoice, or the recipient's invoice date where the recipient must issue it.
• If the reverse charge dates cannot be determined, the time of supply is the date of entry in the recipient's books.
• Vouchers: date of issue if the supply is identifiable then; otherwise date of redemption.
• Residual rule: due date of the periodical return, or otherwise the date tax is paid.
• Interest, late fee or penalty for delayed payment: date the supplier receives that addition in value.

Common mistakes

• Taking the date of delivery or contract as the time of supply under forward charge Fix: Under Section 12(2) only the invoice date (or last date to issue it) and the payment date count. Pick the earlier.
• Taking the later of invoice and payment date Fix: The rule says earlier. Underline the word in the text before answering.
• Using the date of delivery of goods as the time of supply. Fix: Under Section 12(2) only the invoice date, the last date for the invoice, and the payment date count. Delivery matters only because Section 31 uses it to fix the last date for the invoice.
• Taking the payment date as the bank credit date every time. Fix: Take the earlier of the date of entry in the books and the date of credit in the bank account.
• Using the supplier's invoice date as the time of supply, as in forward charge. Fix: Check who pays the tax. If it is the recipient, use Section 12(3) and compare all three dates.
• Taking the 30th day from the invoice as the date in clause (c). Fix: Count 30 days from the invoice date and then take the next day. That is invoice date + 31 days.
• Taking the redemption date for every voucher. Fix: Test whether the supply is identifiable at issue. If yes, the issue date applies.
• Using sub-section 5 as the first rule. Fix: Apply it only when sub-section 2, 3 or 4 cannot fix the time. Say so in your answer.
• Using the supply date as the time of supply under section 14. Fix: Under section 14 the time of supply is always the invoice date or the payment date, as the clause directs. The supply date only decides which clause applies.
• Supply before the change, payment before the change, invoice after the change: students take the invoice date. Fix: Under section 14(a)(iii) the time of supply is the payment date, because payment came before the change. So the old rate applies.

Exam tips

• Begin each answer by naming Section 12 and the sub-section that fits the facts, then apply it to the dates.
• Write the dates as a short list and mark the earlier or earliest one. Examiners look for the logic, not only the date.
• Mention Explanation 1 whenever part payment or part invoice appears in the facts.
• State the ₹1,000 proviso exactly: excess up to one thousand rupees, at the supplier's option.
• End with a clear conclusion naming the time of supply, since the paper is case based.
• Write the section number and the rule in one line first, then apply the dates. Examiners reward the provision, analysis and conclusion order.
• Underline every date in the question and label each one: invoice, due date, book entry, bank credit, delivery.
• Always say which trigger was earlier and why. A bare date earns little.