Taxation · Time of Supply

Time of Supply of Goods under Forward Charge

Updated 4 October 2026 · Fact-checked

Time of supply of goods under forward charge is the date on which GST liability arises. Under section 12(2) of the CGST Act, it is the earlier of two dates: the invoice date or the last date by which the invoice should have been issued, and the date the supplier receives payment. List the dates and pick the earliest.

Understand Time of Supply of Goods under Forward Charge

Time of supply tells you when the supplier must pay GST on a supply. It decides the tax period in which the supply is reported in the return. It also decides which rate and which rules apply, if there is a change in law.

Under forward charge, the supplier collects and pays the tax. For goods, section 12(2) of the CGST Act gives the rule. The time of supply is the earlier of (a) the date of issue of invoice, or the last date on which the supplier was required to issue the invoice under section 31, and (b) the date on which the supplier receives the payment.

So you are never looking at just one date. Date (a) itself has two parts. If the supplier issues the invoice late, the law uses the last date allowed, not the actual late date. If the supplier issues the invoice early, the actual date is used. Then you compare this with the payment date and take the earlier one.

The date of receipt of payment is the earlier of the date the payment is entered in the supplier's books and the date it is credited to the supplier's bank account.

The rule works to the extent covered. If the invoice covers part of the supply, or the payment covers part of the value, the time of supply is fixed separately for each part. An advance for part of the price creates a time of supply for that part on the advance date.

Key rules to remember

Time of supply of goods (forward charge), section 12(2): Time of supply = Earlier of [ (invoice date or last date for invoice) ; date of receipt of payment ]; Apply it separately to each part of the value covered by an invoice or a payment.
Last date for invoice (goods): Movement of goods: before or at the time of removal. No movement: before or at the time of delivery or making available.; This is the section 31 deadline. If the actual invoice is later than this, use this date.
Last date for invoice, continuous supply of goods: On or before the due date of payment if it is ascertainable from the contract; otherwise before or at the time the supplier receives the payment; if payment is linked to the completion of an event, on or before the date that event is completed.; Section 31(4) deals with continuous supply of goods, where statements of accounts or payments continue over time. Do not confuse it with the rule for services in section 31(2).
Date of receipt of payment: Earlier of: date entered in supplier's books ; date credited to supplier's bank account; Use the earlier of the two.
Excess payment proviso: If the excess received over the invoice value is ≤ ₹1,000, the supplier may, at its option, treat the date of issue of invoice in respect of such excess amount as the time of supply for that excess.; It is the supplier's option. Without the option, the payment date applies to the excess.

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

Use this method for any question on time of supply of goods when the supplier pays the tax.

1Confirm it is a supply of goods and that the supplier pays tax (forward charge). If the recipient pays tax under reverse charge, stop and use the reverse charge rule.
2List every date in the question: contract date, advance dates, date of removal or delivery, invoice date, date of bank credit, date of entry in books.
3Find the last date for invoice under section 31. Check whether goods move (removal date) or not (delivery date), or whether it is a continuous supply.
4Fix date (a): the earlier of the actual invoice date and the last date for invoice. A late invoice does not delay the time of supply.
5Fix date (b): the payment date, taking the earlier of the bank credit date and the books entry date. Ignore the cheque date or date of the contract.
6Take the earlier of (a) and (b). If amounts differ, repeat the exercise for each part of the value: advance part and balance part.
7Check the ₹1,000 excess payment proviso if a small excess over the invoice value is received.
8Write the answer with the rule stated, the dates compared and the conclusion for each part.

Quickest way: Three-date shortcut for MCQs and written answers

When to use it: Use it when the question has many dates and you have about two minutes.

Write three labels: Invoice (or last date), Payment, Answer.
Replace the actual invoice date with the section 31 last date (removal, delivery, or continuous-supply date as applicable) if the invoice was issued after that last date.
Replace the payment date with the earliest of bank credit and books entry.
Pick the smaller date. For MCQs, eliminate options showing a date later than any of your two candidates.
If an advance covers only part, split the value and give a date for each part. Options with a single date for the whole value are usually wrong.
In the written answer, begin with 'As per section 12(2) of the CGST Act, 2017, time of supply of goods is the earlier of...', then show dates in a short table-style list, then conclude. This earns step marks even if one date is misread.

Common mistakes in Time of Supply of Goods under Forward Charge

Using the actual invoice date even when the invoice was issued after the last permitted date.
Students read 'date of invoice' and stop, forgetting the 'last date' limb.
Fix: Always work out the section 31 deadline first. If the invoice is later than it, use the deadline.
Ignoring an advance and giving one time of supply for the whole value.
Students treat the supply as one event.
Fix: Remember the supply is deemed made to the extent of the invoice or payment. Split the value and date each part.
Taking the date of the contract or order as the time of supply.
It feels natural that the deal date triggers tax.
Fix: The contract date is never a limb of section 12(2). Only the invoice, deadline and payment dates matter.
Using the date a cheque was received or dated instead of the date of bank credit or books entry.
Students mix up receipt of the instrument with receipt of payment.
Fix: Use the earlier of the date entered in the books and the date credited to the bank account.
Applying the reverse charge rule to a forward charge question, or vice versa.
Both rules sit in section 12 and use similar words.
Fix: Check who pays the tax first. Forward charge uses section 12(2); reverse charge uses section 12(3).
Treating every excess receipt as taxable on invoice date.
Students remember the proviso but forget its ₹1,000 limit and that it is optional.
Fix: The proviso applies only to excess up to ₹1,000 and only if the supplier opts. Then the date of issue of invoice in respect of such excess amount is the time of supply for that excess. Otherwise the payment date applies to the excess.

Worked examples

Example 1

Delhi Traders, a registered supplier, agrees to sell goods for ₹6,00,000 (invoice value, tax included) to a buyer in Delhi. It receives an advance of ₹1,00,000 credited to its bank account on 5 May; the entry in books is made on 7 May. The goods are removed on 20 May. The invoice for the full ₹6,00,000 is issued on 28 May. No other payment is received before 28 May. Determine the time of supply under forward charge.

Show the solution

Goods move, so the last date for the invoice is the date of removal: 20 May.
Date (a) for the whole value: the earlier of actual invoice date (28 May) and last date (20 May) = 20 May.
Date (b) for the advance: bank credit 5 May and books entry 7 May. The earlier is 5 May.
For the advance of ₹1,00,000: the earlier of 20 May and 5 May = 5 May.
For the balance of ₹5,00,000: no payment before the invoice, so the earlier of 20 May and 28 May = 20 May.

Answer: Time of supply is 5 May for ₹1,00,000 and 20 May for the balance ₹5,00,000.

Example 2

Sharma Electricals issues a tax invoice on 10 March for ₹1,18,000 for goods. The goods are delivered to the buyer on 12 March (the goods are not removed, so the last date for the invoice is the date of delivery). It receives ₹1,18,800 on 15 March; the amount is entered in books on 16 March and credited to the bank on 15 March. It issues a separate invoice for the excess ₹800 on 20 March. Determine the time of supply.

Show the solution

Last date for invoice = date of delivery = 12 March. Actual invoice date is 10 March.
Date (a) = earlier of 10 March and 12 March = 10 March.
Payment date: bank credit 15 March, books 16 March. The earlier is 15 March.
For ₹1,18,000, the earlier of 10 March and 15 March = 10 March.
Excess received = ₹1,18,800 − ₹1,18,000 = ₹800, which is not more than ₹1,000, so the proviso is available.
For ₹800, at the supplier's option the time of supply is the date of issue of invoice in respect of such excess amount, which is 20 March. If it does not opt, the date is the payment date, 15 March.

Answer: Time of supply is 10 March for ₹1,18,000. For the excess ₹800 it is 20 March (date of issue of invoice in respect of such excess amount) if Sharma Electricals opts, otherwise 15 March.

Exam tips

Write 'section 12(2) of the CGST Act, 2017' and the rule in one line first. Examiners give marks for the provision before the working.
Always show the section 31 last date for invoice, even if the invoice was issued on time. It proves you applied both limbs.
If the question gives advance, split the value and give a separate date for each part. This is where most marks are lost.
Watch the wording 'credited to bank' and 'entered in books'. You must pick the earlier of the two.
In MCQs, build the answer from the dates given. If an option shows a date that is not in the question, it is almost certainly wrong.

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 forward charge?

It is the earlier of two dates under section 12(2) of the CGST Act. One is the invoice date or the last date for issuing the invoice. The other is the date the supplier receives payment. The earlier date is when GST liability arises.

What if the supplier issues the invoice late?

The delay does not push the time of supply later. The law uses the last date by which the invoice should have been issued under section 31. If payment was received earlier than that date, the payment date applies.

How is the date of receipt of payment decided?

It is the earlier of the date the payment is entered in the supplier's books and the date it is credited to the supplier's bank account. Use the earlier of the two dates in your working.

Does an advance payment create a time of supply for goods?

Yes, to the extent of the advance. The supply is deemed made for the part covered by the payment, so the advance date is the time of supply for that part. The balance is dated separately.