Indirect Tax Laws and Practice · Time of Supply

Time of Supply of Goods under Section 12 CGST

Updated 11 October 2026 · Fact-checked

Under Section 12(2) of the CGST Act, the time of supply of goods (forward charge) is the earlier of two dates: the date the supplier issues the invoice, or the last date by which the invoice should have been issued under Section 31, and the date the supplier receives payment. Find both dates, pick the earlier one, and apply it only to the extent covered.

Understand Time of Supply of Goods: General Rule

Time of supply is the point at which the liability to pay GST on a supply arises. It decides which tax period you report the supply in, and so when you must pay the tax. Section 12(1) says the liability on goods arises at the time of supply, fixed as per Section 12.

For goods supplied on forward charge, Section 12(2) gives two triggers. The first is the date of issue of invoice, or the last date on which the supplier is required under Section 31 to issue the invoice, for that supply. The second is the date the supplier receives payment. The time of supply is whichever of these dates is earlier.

The invoice trigger has two parts. If the supplier issues the invoice in time, use the actual issue date. If the supplier issues it late or never, use the last date by which it should have been issued. So delay in invoicing cannot postpone the tax.

Section 31(1) fixes that last date. A registered person supplying taxable goods must issue the tax invoice before or at the time of removal of goods, where the supply involves movement of goods. In any other case, it is before or at the time of delivery of goods or making them available to the recipient.

Payment is tested the same way. Explanation 2 says the date of receipt of payment is the date the payment is entered in the supplier's books or credited to his bank account, whichever is earlier. Under Explanation 1, supply is deemed made only to the extent covered by the invoice or the payment. So advances and part payments create a time of supply for that part alone.

Key rules to remember

General rule, Section 12(2): Time of supply = earlier of (A) date of invoice, or last date for issuing it under Section 31, and (B) date of receipt of payment; Applies to goods on forward charge. Reverse charge is under Section 12(3).
Last date of invoice, movement of goods: Last date = on or before the date of removal of goods; Section 31(1)(a): invoice before or at the time of removal where supply involves movement.
Last date of invoice, no movement: Last date = on or before the date of delivery or making goods available to the recipient; Section 31(1)(b): any other case.
Date of receipt of payment: Earlier of (date entered in supplier's books) and (date credited to supplier's bank account); Explanation 2 to Section 12(2).
Extent of supply: Supply is deemed made only to the extent covered by the invoice or the payment; Explanation 1. Part payment fixes time of supply for that part only.
Excess payment proviso: Excess received up to ₹1,000 over the invoice amount: supplier may choose the invoice date for that excess; Option belongs to the supplier. It does not apply to excess above ₹1,000.
Interest, late fee, penalty: Time of supply = date the supplier receives such addition in value; Section 12(6), for delayed payment of consideration.

How to solve Time of Supply of Goods: General Rule questions

Use this method for any question on the time of supply of goods on forward charge.

1Check that the supply is of goods and that the supplier, not the recipient, pays tax. If tax is on reverse charge, Section 12(3) applies instead.
2Note whether the goods move. This decides the last date for the invoice under Section 31(1).
3Find the last date for invoice: the removal date if goods move, or the delivery or availability date if they do not.
4Find the actual invoice date. If it is later than the last date, or missing, take the last date as the invoice-side date.
5Find the payment date: the earlier of the book entry date and the bank credit date. If there are advances or instalments, treat each separately.
6Compare the invoice-side date with the payment date. The earlier one is the time of supply, to the extent of the invoice or payment.
7If excess payment is up to ₹1,000, check whether the supplier opts for the invoice date for that excess.
8State the answer with the section and one line of reasoning, and the tax period it falls in if asked.

Quickest way: Two-date race

When to use it: Use it for MCQs and short numerical questions with a clear invoice and payment date.

Write two dates: Date 1 = invoice date, capped at the removal or delivery date; Date 2 = payment date (earlier of book entry or bank credit).
Circle the earlier date. That is the time of supply.
If payment is partial, split the value and run the race separately for each part.
Scan the options for traps such as the order date, dispatch of an advance cheque, or the date of delivery when the invoice was issued earlier.

Common mistakes in Time of Supply of Goods: General Rule

Taking the actual invoice date even when it is issued after removal of goods.
Students read 'date of issue of invoice' and stop there.
Fix: Remember the clause: date of issue, or the last date by which the invoice was required to be issued. Late invoicing cannot defer the time of supply.
Using the date of delivery as the time of supply by default.
It feels natural that tax arises when goods reach the buyer.
Fix: Delivery matters only where goods do not move, as the last date for invoice. Where goods move, the removal date is the benchmark.
Treating the cheque date or the date of order as the payment date.
Confusion between payment made and payment received.
Fix: Use the earlier of the date entered in the supplier's books and the date credited to the supplier's bank account.
Applying one date to the whole supply when only part is invoiced or paid.
Ignoring Explanation 1.
Fix: Split the supply. Each portion has its own time of supply, to the extent covered by the invoice or payment.
Applying the ₹1,000 excess option to any excess amount or treating it as compulsory.
The proviso is remembered loosely.
Fix: It covers excess up to ₹1,000 over the invoice amount, and it is the supplier's option. Above that, the general rule applies.
Using Section 12(2) for a reverse charge supply.
Students do not check who pays the tax.
Fix: Check the charge first. Reverse charge goods follow Section 12(3), with its own earliest-of-dates test.

Worked examples

Example 1

Sharma Traders, Kanpur, a registered person, agrees to sell goods worth ₹4,00,000 to Verma Enterprises. The goods are removed from Sharma's godown on 12 August. The invoice is issued on 20 August. Verma pays the full amount by bank transfer, credited to Sharma's account on 5 September, and Sharma enters it in books on 6 September. What is the time of supply?

Show the solution

The supply is of goods on forward charge, and the goods move, so Section 31(1)(a) requires the invoice on or before the removal date, 12 August.
The invoice was issued on 20 August, after the last date. So the invoice-side date is 12 August.
Payment date is the earlier of book entry (6 September) and bank credit (5 September), which is 5 September.
Compare 12 August with 5 September. The earlier is 12 August.

Answer: The time of supply is 12 August, the last date by which the invoice should have been issued.

Example 2

Iyer Machines Ltd., Chennai, agrees to supply machine parts worth ₹6,00,000 to a buyer. On 3 March the buyer pays an advance of ₹2,00,000, which is credited to the bank that day and entered in books on 4 March. The goods are removed on 25 March and a tax invoice for the full ₹6,00,000 is issued on 25 March. Determine the time of supply for each part.

Show the solution

Under Explanation 1, supply is deemed made to the extent covered by the invoice or the payment, so split the value.
For ₹2,00,000: payment date is the earlier of 4 March (books) and 3 March (bank), which is 3 March. The invoice side is 25 March. The earlier is 3 March.
For the remaining ₹4,00,000: no payment before the invoice. The goods move, so the last date for invoice is the removal date, 25 March, and the invoice was issued on 25 March. The time of supply is 25 March.

Answer: The time of supply is 3 March for ₹2,00,000 and 25 March for the remaining ₹4,00,000.

Exam tips

In the MCQ section, read the question for the invoice date, the removal or delivery date and both payment dates. Choose the earlier of the invoice-side date and the payment date.
Always write the two dates side by side in written answers, then state the earlier date and quote Section 12(2). Marks follow the working.
Watch for part payments and advances. Split the value and give the time of supply for each part.
Check whether the goods move. Quote Section 31(1)(a) or (b) to justify the last date of invoice.
Look for reverse charge hints in the question and switch to Section 12(3) if tax is payable by the recipient.

Practice questions from Time of Supply

Time of Supply of Goods: General Rule 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: General Rule: frequently asked questions

What is the time of supply of goods under Section 12 CGST in simple words?

It is the date on which your GST liability on goods arises. For forward charge, it is the earlier of the invoice date (or the last date the invoice was due) and the date you receive payment.

What is the last date for issuing an invoice for goods?

Under Section 31(1), if goods move, the invoice must be issued before or at the time of removal. If they do not move, it must be issued before or at the time of delivery or making the goods available to the recipient.

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 his bank account, whichever is earlier.

What happens if I receive more than the invoice amount?

If the excess is up to ₹1,000, the supplier may choose the invoice date as the time of supply for that excess. For a larger excess, the general rule applies.