Indirect Tax Laws · Time of Supply

Time of Supply of Goods under Forward Charge (Section 12(2) CGST Act)

Updated 5 October 2026 · Fact-checked

Under forward charge, the time of supply of goods is the earlier of two dates: the invoice date (or the last date by which the invoice should have been issued under Section 31) and the date the supplier receives payment. Apply the rule separately to each invoice or payment, only to the extent it covers.

Understand Time of Supply of Goods under Forward Charge

Time of supply tells you the point at which GST becomes payable. It decides the month in which the supplier must report the supply and pay the tax. It also decides which tax rate applies if the rate changes around that time.

Under forward charge, the supplier of goods pays the GST. Section 12(2) of the CGST Act gives one rule for this case. The time of supply is the earlier of two events. Event 1 is the date of issue of the invoice, or the last date by which the supplier was required to issue it under Section 31, whichever is earlier. Event 2 is the date the supplier receives the payment.

The invoice limb has two parts. If the supplier issues the invoice on time, use the actual invoice date. If the supplier is late or never issues it, use the due date. The due date for goods is before or at the time of removal where the supply involves movement. In other cases it is before or at the time of delivery or of making the goods available. The supplier cannot delay tax by issuing the invoice late.

The payment limb uses a fixed meaning of 'date of receipt'. It is the date the payment is entered in the supplier's books or the date it is credited to the bank account, whichever is earlier.

The supply is treated as made only to the extent covered by the invoice or the payment. An advance for part of the goods fixes the time of supply for that part only. There is also a relief: if the supplier receives up to ₹1,000 more than the invoice amount, the supplier may choose to treat the date of the invoice issued for that excess amount as the time of supply for the excess. If the supplier does not opt, the general rule applies to the excess.

Key rules to remember

General rule, Section 12(2): Time of supply of goods = Earlier of (A) and (B); Use this for forward charge supplies of goods. For reverse charge, a different rule applies.
Invoice limb (A): A = Earlier of (date of issue of invoice, last date for issue of invoice under Section 31); Last date for goods: before or at removal if goods move; otherwise before or at delivery or when goods are made available.
Payment limb (B): B = Date payment is received = Earlier of (date entered in books, date credited to bank); Use the earlier of the two dates. Do not use the cheque date or the date the buyer says it paid.
Extent rule: Supply is deemed made to the extent covered by the invoice or the payment; Work out the time of supply separately for each part of the value.
Excess receipt relief: Excess received ≤ ₹1,000 over the invoice amount: at the supplier's option, time of supply for the excess = date of the invoice issued for the excess; This is the supplier's option. Without the option, or if the excess is more than ₹1,000, the general rule applies to the excess (earlier of invoice date or receipt date).

How to solve Time of Supply of Goods under Forward Charge questions

Use this method for any question asking for the time of supply of goods when the supplier is liable to pay tax. Work out the dates first and compare them last.

1Confirm the supply is a supply of goods and the supplier pays the tax. If the recipient pays under reverse charge, stop and use the reverse charge rule.
2List every date in the facts: removal or delivery, invoice, entry in books, credit in bank, and part payments.
3Find the last date for issuing the invoice under Section 31. For goods that move, it is the date of removal. Otherwise it is the date of delivery or of making the goods available.
4Fix limb A as the earlier of the actual invoice date and that last date. If no invoice was issued, limb A is the last date.
5Fix limb B for each payment as the earlier of the date entered in the books and the date credited to the bank.
6Split the transaction value into parts: advance amounts, and the balance covered by the invoice. Take the earlier of A and B for each part separately.
7Check for an excess receipt of ₹1,000 or less over the invoice value and apply the option if it exists.
8Write the answer in provision, facts, conclusion form. State the rule, show each date, and give the time of supply for each part.

Quickest way: Three-date shortcut

When to use it: Use it for case-scenario MCQs and short written answers where the facts give removal, invoice and payment dates.

Write three dates in a row: removal (or delivery) date, invoice date, payment date.
Replace the invoice date with the removal date if the invoice was late. Replace the payment date with the earlier of the books date and the bank date.
Pick the earliest of the dates left. That is the time of supply.
If the payment covers only part of the value, repeat the steps for the rest of the value without that payment.

Common mistakes in Time of Supply of Goods under Forward Charge

Using the actual invoice date when the invoice was issued late.
Students read 'date of invoice' and stop, forgetting the 'last date to issue the invoice' part of the rule.
Fix: Always work out the Section 31 due date first. Take the earlier of the actual invoice date and the due date.
Using the date the buyer sent the payment, or the cheque date.
Students treat payment as the buyer's act rather than the supplier's receipt.
Fix: Use the earlier of the date entered in the supplier's books and the date credited to the bank.
Applying one date to the whole value even though only an advance was received.
Students forget that the supply is deemed made only to the extent of the invoice or payment.
Fix: Split the value into the advance part and the balance. Find the time of supply for each separately.
Taking the later of invoice and payment dates.
Confusion with other rules where a later event is used, or a wish to give the supplier more time.
Fix: Section 12(2) always takes the earlier date. Underline 'earlier' in your answer.
Treating the ₹1,000 excess relief as automatic.
Students overlook the words 'at the option of the supplier' and the limit.
Fix: State that it is optional and applies only if the excess is ₹1,000 or less. Without the option, or above that limit, the general rule applies to the excess.
Using the forward charge rule for a reverse charge supply.
Students do not check who pays the tax.
Fix: Check who is liable to pay the tax before starting. Use the reverse charge rule if the recipient is liable.

Worked examples

Example 1

Alpha Traders supplies goods with a total value of ₹8,00,000 to Beta Ltd. Goods move from Alpha's warehouse. Alpha receives an advance of ₹2,00,000 and enters it in its books on 5 May. The amount is credited to its bank on 7 May. Goods are removed on 12 May. Alpha issues the invoice for the full value on 20 May. Beta pays the balance of ₹6,00,000 on 25 May. Find the time of supply for each part.

Show the solution

The supply is of goods under forward charge, so Section 12(2) applies.
The goods move, so the last date for the invoice under Section 31 is the date of removal, 12 May. The actual invoice date is 20 May. The earlier of the two is 12 May.
For the advance, the payment is deemed received on the earlier of 5 May (books) and 7 May (bank), which is 5 May.
For ₹2,00,000: the earlier of 12 May (invoice limb) and 5 May (payment) is 5 May.
For the balance ₹6,00,000: the invoice limb is 12 May. The payment was received on 25 May. The earlier is 12 May.

Answer: The time of supply is 5 May for ₹2,00,000 and 12 May for the balance of ₹6,00,000.

Example 2

Gamma Ltd sells machine parts to Delta Ltd. The invoice value is ₹1,18,000. Delta pays ₹1,18,800 on 10 September. Gamma credits it in the books and the bank on the same day. The goods are removed on 15 September and Gamma issues the invoice for ₹1,18,000 the same day. Gamma later issues a separate invoice for the excess ₹800 on 30 September. Find the time of supply for ₹1,18,000 and for the excess ₹800.

Show the solution

Section 12(2) applies because the supplier of goods pays the tax.
The invoice limb for the main supply: the goods move, so the invoice must be issued before or at the time of removal. The last date for issuing the invoice under Section 31 is therefore 15 September, the date of removal. Gamma issued the invoice on 15 September, so limb A is 15 September.
The payment limb: the payment was received on 10 September.
For ₹1,18,000 covered by the invoice and payment: the earlier of 15 September and 10 September is 10 September.
The excess received is ₹800, which is not more than ₹1,000. So the relief is available. At Gamma's option, the time of supply for the excess is the date of the invoice issued for that excess, which is 30 September.
If Gamma does not opt, the general rule applies to the excess. The excess is not covered by the invoice of 15 September, so the date of receipt, 10 September, is the time of supply for the excess.

Answer: The time of supply is 10 September for ₹1,18,000. For the excess ₹800, it is 30 September (the date of the invoice for the excess) if Gamma opts for the relief; otherwise it is 10 September, the date of receipt.

Exam tips

In case-scenario MCQs, the traps are the late invoice and the 'books versus bank' payment date. Write the dates down before you choose an option.
Always show the Section 31 due date in your working, even if the question does not ask for it. Marks are given for the logic.
When an advance covers only part of the value, show a separate time of supply for each part. Examiners look for this split.
Open the written answer with 'As per Section 12(2) of the CGST Act, the time of supply of goods is the earlier of...' and then apply the facts and conclude.
Check the charge type in the first line of the facts. A question on reverse charge will not use this rule.

Practice questions from Time of Supply

Time of Supply of Goods under Forward Charge in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Time of Supply of Goods under Forward Charge: frequently asked questions

What is the time of supply of goods under Section 12(2)?

It is the earlier of the invoice date (or the last date for issuing the invoice) and the date the supplier receives payment. It applies where the supplier is liable to pay GST. It is applied to the extent of each invoice or payment.

How is the date of receipt of payment decided?

It is the date the payment is entered in the supplier's books or the date it is credited to the supplier's bank account, whichever is earlier. The date the buyer pays or the cheque date is not used.

What if the supplier does not issue the invoice at all?

Then the last date by which the invoice should have been issued under Section 31 is used for the invoice limb. For goods that move, that is the date of removal. The time of supply is then the earlier of that date and the payment date.

What is the ₹1,000 excess amount relief?

If the supplier receives up to ₹1,000 more than the invoice amount, the supplier may choose the date of the invoice issued for the excess as the time of supply for the excess. It is an option, not a compulsion. Without the option, the general rule applies to the excess.