Time of Supply of Services under GST (Section 13)

Understand Time of Supply of Services

Key rules to remember

Forward charge, invoice issued within the prescribed period (S.13(2)(a))

Time of supply = earlier of (date of invoice, date of receipt of payment)

Applies only if the invoice is issued within the period under Section 31.

Forward charge, invoice not issued within the prescribed period (S.13(2)(b))

Time of supply = earlier of (date of provision of service, date of receipt of payment)

Late invoice or no invoice. The service date replaces the invoice date.

Residual rule for forward charge (S.13(2)(c))

Time of supply = date the recipient shows the service in his books

Used only where clause (a) or (b) does not apply.

Date of receipt of payment (Explanation (ii))

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

Use the earlier of the two dates, not the cheque date.

Part invoice or part payment (Explanation (i))

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

Work out time of supply separately for each part.

Small excess receipt (proviso to S.13(2))

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

It is an option for the supplier.

Reverse charge (S.13(3))

Time of supply = earlier of (a) recipient's payment date (books or bank debit, whichever is earlier), (b) the date immediately following 60 days from the supplier's invoice date, where the supplier must issue the invoice, (c) date of recipient's invoice, where the recipient must issue it

Clause (c) applies from 1-11-2024. If none can be determined, use the date of entry in the recipient's books.

Recipient's invoice time limit (Rule 47A)

Recipient liable under Section 9(3) or 9(4) issues invoice within 30 days from the date of receipt of the supply

For supplies received from unregistered suppliers where the recipient must issue the invoice.

Associated enterprise, supplier outside India (second proviso to S.13(3))

Time of supply = earlier of (date of entry in recipient's books, date of payment)

Applies where supplier and recipient are associated enterprises and the supplier is located outside India.

Vouchers (S.13(4))

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

Applies to supply of vouchers.

Residuary rule (S.13(5))

If time cannot be fixed: date the periodical return is due, or else date of tax payment

Last resort.

Interest, late fee, penalty (S.13(6))

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

Applies to the added amount only.

How to solve Time of Supply of Services questions

1. 1Check who pays the tax: supplier (forward charge) or recipient (reverse charge). Choose Section 13(2) or 13(3).
2. 2List all dates given: service date, invoice date, payment date (books and bank), and any due date.
3. 3For forward charge, decide if the invoice was issued within the Section 31 period. For a one-off service, use the period stated in the question. For continuous supply, use Section 31(5).
4. 4If the invoice was in time, take the earlier of invoice date and payment date. If not, take the earlier of service date and payment date.
5. 5For payment date, take the earlier of the books entry date and the bank credit date.
6. 6For part payments or part invoices, split the supply and fix a separate time of supply for each part.
7. 7For reverse charge, find the recipient's payment date, and either the 61st day after the supplier's invoice or the recipient's invoice date. Choose the earliest.
8. 8State the answer date and name the clause. Then add the tax month if asked.

Quickest way: Two-question shortcut for forward charge

Common mistakes in Time of Supply of Services

• Taking the invoice date even when the invoice was issued late.

  Students remember 'invoice or payment, whichever is earlier' and skip the condition.

  Fix: First test whether the invoice came within the Section 31 period. If not, use the service date instead.

• Using the cheque date or the date of deposit as the payment date.

  Students treat the date of payment loosely.

  Fix: Use the earlier of the date entered in the supplier's books and the date credited to the bank account.

• Applying the 30-day rule of goods to services under reverse charge.

  Section 12(3) and Section 13(3) look similar.

  Fix: For services under reverse charge, the supplier's invoice limit is the date immediately following 60 days. For goods it is following 30 days.

• Treating the 60th day as the time of supply.

  Students read '60 days' and stop.

  Fix: The date is the day immediately following 60 days from the invoice date. Count 60 days, then add one.

• Ignoring advance or part payment.

  Students fix one date for the whole contract.

  Fix: The supply is deemed made to the extent covered by the invoice or payment. Fix separate dates for each part.

• Using the recipient's books date as the first test for forward charge.

  Section 13(2)(c) is read as an option.

  Fix: Clause (c) applies only where clause (a) or (b) does not apply. Apply it last.

Worked examples