Tax Laws and Practice · Time, Value and Place of Supply

Change in Rate of Tax and Time of Supply under GST

Updated 11 October 2026 · Fact-checked

When the GST rate changes, section 14 of the CGST Act fixes the time of supply, and so the rate, using three dates: supply, invoice and payment. Note whether each falls before or after the change. Then pick the invoice date, the payment date or the earlier of the two, as the six cases direct.

Understand Change in Rate of Tax and Time of Supply

The rate of GST that applies to a supply is the rate in force at the time of supply. Normally sections 12 (goods) and 13 (services) fix that time. A problem arises when the rate changes between the date of supply, the date of invoice and the date of payment. Which rate applies then?

Section 14 answers this. It starts with "notwithstanding anything contained in section 12 or section 13", so it overrides those sections when a rate change is involved. It looks at three events: when the goods or services were supplied, when the invoice was issued, and when payment was received. For each event, you only ask one thing: was it before or after the change in rate?

The section has six cases. Three cover supplies made before the change, under clause (a). Three cover supplies made after the change, under clause (b). Each case tells you the time of supply: the invoice date, the payment date, or the earlier of the two. If that date falls before the change, the old rate applies. If it falls after, the new rate applies.

There is one special rule on payment. The date of receipt of payment is the earlier of the date it is entered in the supplier's books and the date it is credited to the bank account. The proviso adds an exception. If the bank credit comes after four working days from the date of change in rate, the date of receipt is the bank credit date.

For a supply that spreads over time, remember that a supply is treated as made only to the extent covered by the invoice or the payment. So you apply the rate-change test part by part, for each invoice or payment.

Key rules to remember

Supply before the change: both invoice and payment after: Time of supply = earlier of date of invoice and date of receipt of payment; Section 14(a)(i). Both events fall after the change, so the new rate applies.
Supply before the change: invoice before, payment after: Time of supply = date of issue of invoice; Section 14(a)(ii). The invoice falls before the change, so the old rate applies.
Supply before the change: payment before, invoice after: Time of supply = date of receipt of payment; Section 14(a)(iii). The payment falls before the change, so the old rate applies.
Supply after the change: payment after, invoice before: Time of supply = date of receipt of payment; Section 14(b)(i). The payment falls after the change, so the new rate applies.
Supply after the change: invoice and payment both before: Time of supply = earlier of date of receipt of payment and date of issue of invoice; Section 14(b)(ii). Both fall before the change, so the old rate applies.
Supply after the change: invoice after, payment before: Time of supply = date of issue of invoice; Section 14(b)(iii). The invoice falls after the change, so the new rate applies.
Date of receipt of payment: Earlier of date entered in books and date credited to bank; Explanation to section 14. Proviso: if the bank credit is after four working days from the date of change in rate, the date of receipt is the date of bank credit.

How to solve Change in Rate of Tax and Time of Supply questions

Use the same routine for every question. Do not guess the rate from the date of supply alone.

1Write down the date the rate changed, and the old and new rates.
2List the three dates: supply (delivery or performance), invoice, and payment. Mark each one as before or after the change.
3Check the payment date. Take the earlier of the books entry and the bank credit. If the bank credit is after four working days from the change, use the bank credit date.
4Decide whether the supply is before the change (clause a) or after it (clause b).
5Match the invoice and payment positions to one of the six cases and read off the time of supply: invoice date, payment date, or the earlier of the two.
6Compare that date with the change date. Before means the old rate. After means the new rate.
7Compute the tax on the value covered by that invoice or payment, and state your conclusion citing section 14.

Quickest way: Before-or-after check on invoice and payment

When to use it: Use it for short problems with clear dates, once you know the six cases.

If the supply was made before the change: the old rate applies if the invoice or the payment came before the change. The new rate applies only if both came after.
If the supply was made after the change: the old rate applies only if both the invoice and the payment came before the change. In every other case the new rate applies.
Still write the clause number and the time-of-supply date in your answer, because the marks are for the provision and the conclusion.
If the payment was credited to the bank late, apply the four working days proviso first, then use this check.

Common mistakes in Change in Rate of Tax and Time of Supply

Applying the rate on the date of supply only
Students assume the rate is the rate on the day goods are delivered or service is performed.
Fix: Section 14 decides by invoice and payment dates as well. Always list all three dates before choosing the rate.
Mixing up clause (a) and clause (b)
The six cases look alike, and students read the wrong clause.
Fix: First decide whether the supply is before or after the change. Then pick the clause. Use the quick check to verify your result.
Ignoring the four working days proviso on bank credit
Students take the books entry date as the payment date and stop there.
Fix: Take the earlier of the books entry and bank credit. Then check whether the bank credit came after four working days from the change. If it did, the bank credit date is the date of receipt.
Using the earlier of invoice and payment in every case
Sections 12 and 13 use the earlier date, and students carry this habit over.
Fix: Only cases (a)(i) and (b)(ii) use the earlier date. The other four name one specific date.
Treating the whole contract value as one supply
Students ignore the rule that supply is made to the extent covered by the invoice or payment.
Fix: Split the value by invoice or payment and test each part against the change date.
Writing only the rate, with no provision
Students rush to the number.
Fix: Write the provision, the dates, the clause applied and a clear conclusion. The ICSI style rewards this order.

Worked examples

Example 1

Assume the GST rate on a good changes from 12% to 18% with effect from 1 October 2026. Rohan Traders supplied goods worth ₹5,00,000 to Mehta Exports on 25 September 2026. It issued the invoice on 28 September 2026 and received payment on 5 October 2026. Determine the time of supply and the tax payable.

Show the solution

Change date: 1 October 2026. Old rate 12%, new rate 18%.
Supply: 25 September, before the change. So clause (a) of section 14 applies.
Invoice: 28 September, before the change. Payment: 5 October, after the change.
This is the case where the invoice is issued before the change but payment is received after it. Section 14(a)(ii) says the time of supply is the date of issue of invoice.
Time of supply = 28 September 2026, which is before the change. The old rate of 12% applies.
Tax = 12% of ₹5,00,000 = ₹60,000.

Answer: The time of supply is 28 September 2026 under section 14(a)(ii). GST is payable at 12%, which is ₹60,000.

Example 2

Using the same rate change (12% to 18% from 1 October 2026), Anand Pvt Ltd supplied goods worth ₹4,00,000 on 26 September 2026. It issued the invoice on 10 October 2026. The payment was entered in its books on 30 September 2026, but the cheque was credited to its bank account on 20 October 2026. Assume that 20 October is after four working days from the change. Determine the rate of tax.

Show the solution

Supply: 26 September, before the change. So clause (a) applies.
Invoice: 10 October, after the change.
Payment: the earlier of the books entry (30 September) and bank credit (20 October) is 30 September. But the bank credit is after four working days from the change, so the proviso makes the date of receipt 20 October.
So both the invoice (10 October) and the payment (20 October) fall after the change. Section 14(a)(i) applies: the time of supply is the earlier of the two dates.
Earlier date = 10 October 2026, which is after the change. The new rate of 18% applies.
Tax = 18% of ₹4,00,000 = ₹72,000.

Answer: The time of supply is 10 October 2026 under section 14(a)(i). GST is payable at 18%, which is ₹72,000. Without the proviso, the books entry of 30 September would have given the old rate under section 14(a)(iii).

Exam tips

Draw a small timeline with the change date and mark supply, invoice and payment on it before you write. It prevents clause mix-ups.
Always state the clause, for example section 14(a)(ii), and the time-of-supply date, then the rate. Do not stop at the rate.
Check every payment for the bank credit detail. A question that mentions a cheque or bank credit date is usually testing the proviso.
Do not use sections 12 or 13 once a rate change falls between the dates. Section 14 overrides them.
Show the tax computation in rupees, with Indian number grouping, so you earn the calculation marks.

Practice questions from Time, Value and Place of Supply

Change in Rate of Tax and Time of Supply in other exams

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

Change in Rate of Tax and Time of Supply: frequently asked questions

What does section 14 of the CGST Act deal with?

It fixes the time of supply when the rate of tax on goods or services changes. It overrides sections 12 and 13 for such cases. The time of supply then decides whether the old or new rate applies.

How many cases are there in section 14?

There are six: three where the supply was made before the change, and three where it was made after. Each tells you whether to use the invoice date, the payment date or the earlier of the two.

What is the date of receipt of payment for section 14?

It is the earlier of the date the payment is entered in the supplier's books and the date it is credited to the bank account. If the bank credit comes after four working days from the date of change in rate, the bank credit date is used.

Is the rate always the one in force on the date of supply?

No. The rate follows the time of supply fixed under section 14. That may be the invoice date or the payment date, so the rate can differ from the rate on the supply date.