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

Time of Supply of Goods under Section 12 CGST Act

Updated 11 October 2026 · Fact-checked

Time of supply of goods is the date on which GST liability arises. Under forward charge, it is the earlier of the invoice date (or the last date to issue the invoice) and the date of receiving payment. Under reverse charge, it is the earliest of three dates. Section 12 CGST Act governs it.

Understand Time of Supply of Goods

GST is payable when a supply happens, but you also need to know in which month the liability falls. That date is the time of supply. It decides which return you report the supply in and when you pay tax. Section 12(1) says the liability to pay tax on goods arises at the time of supply, as worked out under Section 12.

The idea behind the rule is simple. Tax should not wait for money to arrive if the supplier has already billed, or was bound to bill. It should also not wait for the invoice if money has already come in. So the law takes the earlier of the invoice event and the payment event.

The invoice event is not just the actual date of invoice. It is the date of issue of the invoice or the last date on which the supplier must issue it under Section 31, whichever applies. For goods, Section 31(1) requires a tax invoice before or at the time of removal of goods (where goods move) or at delivery or making available (in other cases). So a supplier who ships goods without invoicing cannot delay the liability. The removal date becomes the invoice date for this purpose.

When the recipient pays tax under reverse charge, the supplier is not the one paying, so the rule looks at the recipient's side: receipt of goods, payment, and a 30-day limit after the supplier's invoice. The earliest date wins.

There are also fall-back rules for vouchers, for cases where the time cannot be fixed, and for interest, late fee or penalty added to the value. Learn the main rule first, then these special cases.

Key rules to remember

Forward charge: time of supply of goods (Section 12(2)): Time of supply = earlier of (a) date of issue of invoice, or last date on which invoice is required to be issued under Section 31; and (b) date on which supplier receives payment; Applies to the extent covered by the invoice or the payment. Supply is deemed made to that extent (Explanation 1).
Date of receipt of payment (Section 12(2), Explanation 2): Date of payment = earlier of (date entered in supplier's books) and (date credited to supplier's bank account); Use the earlier of the two dates, not the cheque date or the date of dispatch.
Excess payment up to ₹1,000 (proviso to Section 12(2)): If supplier receives up to ₹1,000 more than the invoice amount, time of supply for that excess = date of invoice for the excess, at the supplier's option; Applies only to excess amount up to ₹1,000, and it is the supplier's option.
Reverse charge: time of supply of goods (Section 12(3)): Time of supply = earliest of (a) date of receipt of goods; (b) date of payment as entered in recipient's books or date debited in recipient's bank account, whichever is earlier; (c) date immediately following 30 days from the date of supplier's invoice or equivalent document; If none of (a), (b), (c) can be determined, the date of entry in the recipient's books applies.
Vouchers (Section 12(4)): Date of issue of voucher if supply is identifiable at that point; otherwise date of redemption; Applies to supply of vouchers by a supplier.
Residual rule (Section 12(5)): If time cannot be determined under sub-sections (2), (3) or (4): date on which the periodical return is to be filed, or in any other case the date on which tax is paid; Use only as a last resort.
Interest, late fee or penalty (Section 12(6)): Time of supply for the addition in value = date on which supplier receives such addition; Covers amounts charged for delayed payment of consideration.

How to solve Time of Supply of Goods questions

Use this order for any problem. It keeps you from mixing forward charge and reverse charge rules.

1Identify what is supplied. Confirm it is goods, so Section 12 applies and not Section 13.
2Check whether tax is payable by the supplier (forward charge) or by the recipient (reverse charge).
3List every date in the facts: removal or delivery, invoice, payment received or entered, receipt of goods.
4Forward charge: find the invoice date. If the invoice was not issued in time, use the last date for issue under Section 31 (before or at removal where goods move, or at delivery in other cases).
5Find the payment date as the earlier of the book entry date and the bank credit date.
6Pick the earlier of the invoice date and the payment date. Apply it separately to each part if payment or invoice covers only part of the supply.
7Reverse charge: pick the earliest of receipt of goods, payment date (earlier of books and bank debit) and the day after 30 days from the supplier's invoice.
8Write the conclusion with the section number and state the month in which liability arises.

Quickest way: Earlier-of test with a date list

When to use it: Use it in numerical problems with several dates and a limited time.

Write the dates in a short vertical list, oldest at top.
Mark each date as I (invoice or due date for invoice), P (payment) or G (receipt of goods).
Forward charge: the first I or P in the list is the answer.
Reverse charge: the first G, P or the 31st day after supplier's invoice is the answer. Compute that 31st-day date first.
If the question has part payment or part invoice, repeat the test for each part.

Common mistakes in Time of Supply of Goods

Taking the actual date of delivery as the time of supply even when an invoice or payment came earlier.
Students think tax follows the physical movement of goods.
Fix: Remember the rule is the earlier of invoice date (or due date for invoice) and payment date. Delivery matters only because it fixes the last date for the invoice.
Using the date the invoice was actually issued when it was issued late.
The words 'date of issue of invoice' are read alone.
Fix: The text also says 'or the last date on which he is required to issue the invoice under Section 31'. A late invoice does not push the time of supply later.
Taking the cheque date as the payment date.
Students ignore Explanation 2.
Fix: Use the earlier of the date the payment is entered in the supplier's books and the date it is credited to his bank account.
Using 60 days for reverse charge on goods.
The 60-day period in Section 13 for services is confused with goods.
Fix: For goods under Section 12(3), the limit is the date immediately following 30 days from the supplier's invoice.
Using 'earlier of' for reverse charge instead of 'earliest of' three dates.
Students carry over the two-date forward charge rule.
Fix: Reverse charge on goods has three dates: receipt of goods, payment, and day after 30 days from invoice. Check all three.
Treating the whole supply as taxable on the payment date when only an advance was received.
Explanation 1 is skipped.
Fix: Supply is deemed made only to the extent covered by the invoice or payment. Split the supply and fix the time for each part.

Worked examples

Example 1

Sharma Traders, Jaipur, agrees to sell machine parts to Kiran Industries for ₹2,00,000 plus GST. The goods are removed from Sharma's godown on 12 August. The invoice is issued on 20 August. Sharma receives full payment, credited to his bank account on 6 August. Payment is entered in his books on 9 August. Find the time of supply.

Show the solution

The supply is of goods under forward charge, so Section 12(2) applies.
Invoice event: goods move, so Section 31(1) requires the invoice before or at removal. The last date is 12 August. The actual invoice date of 20 August is later, so use 12 August.
Payment event: the date is the earlier of book entry (9 August) and bank credit (6 August). So it is 6 August.
Time of supply is the earlier of 12 August and 6 August, which is 6 August.

Answer: The time of supply is 6 August, the date the payment was credited to the bank account. GST liability arises in the month of August.

Example 2

Mehta Enterprises, a registered person, buys 500 kg of agricultural produce on which the tax is payable under reverse charge, from an unregistered supplier. Mehta receives the goods on 18 March. The supplier's invoice is dated 2 March. Mehta enters the payment in books on 25 March and the amount is debited from his bank account on 22 March. Find the time of supply.

Show the solution

Tax is payable on reverse charge, so Section 12(3) applies. Take the earliest of three dates.
Date of receipt of goods: 18 March.
Payment date: the earlier of the date entered in books (25 March) and the date debited in bank (22 March), which is 22 March.
Day immediately following 30 days from the invoice date 2 March: 30 days after 2 March is 1 April, so the following day is 2 April.
Earliest of 18 March, 22 March and 2 April is 18 March.

Answer: The time of supply is 18 March, the date of receipt of goods. Mehta must account for the tax in respect of this supply for March.

Exam tips

Always state the section: Section 12(2) for forward charge and Section 12(3) for reverse charge. ICSI-style answers carry the provision, analysis and conclusion.
In numerical problems, show each date with its label (invoice, payment, receipt) before choosing, so partial marks are secured.
Watch for traps: late invoices, advances, part payments and payments of ₹1,000 or less above the invoice amount.
Check whether the question gives goods or services. The 30-day limit applies to goods and the 60-day limit to services under reverse charge.
Link to Section 31: if the invoice date is not given, work out the last date for invoice from removal or delivery.

Practice questions from Time, Value and Place of Supply

Time of Supply of Goods 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: frequently asked questions

What is the time of supply of goods under Section 12 CGST Act?

It is the date on which liability to pay GST on goods arises. Under forward charge it is the earlier of the invoice date (or the last date to issue it under Section 31) and the date of receiving payment.

How is time of supply of goods decided under reverse charge?

Take the earliest of the date of receipt of goods, the date of payment (earlier of books entry and bank debit) and the date immediately following 30 days from the supplier's invoice. If none can be fixed, use the date of entry in the recipient's books.

What if the supplier does not issue the invoice on time?

A late invoice does not delay the liability. The time of supply considers the last date on which the invoice was required to be issued under Section 31, so the earlier of that date and the payment date applies.

What happens when advance payment is received for goods?

Supply is deemed made to the extent of the payment, so tax liability on that portion arises on the payment date if it is earlier than the invoice date. The balance follows its own invoice or payment date.