Time of Supply under GST – Rules, Examples & Compliance

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Time of Supply under GST – Rules, Examples & Compliance

The Time of Supply under GST is one of the most crucial concepts for every taxpayer. It determines the exact point of time when GST becomes payable to the government. In simple terms, it helps identify when the liability to pay tax arises, whether for goods or services.

Understanding the time of supply is essential because an incorrect determination can lead to interest, penalties, and non-compliance. In this guide, we will explain the meaning, importance, rules for goods and services, examples, and key compliance requirements related to the Time of Supply under GST for 2025.

What is Time of Supply under GST?

The Time of Supply means the point in time when goods are considered to be supplied or services are considered to be rendered. It is the trigger point for tax liability under GST.

Once the time of supply is determined, the taxpayer must pay GST in the same period, report it in returns, and issue the necessary tax invoices.

Why Time of Supply is Important

Correctly determining the time of supply ensures:

  • Accurate GST Payment – Avoids paying tax too early or too late.

  • Compliance with GST Law – Prevents penalties and notices.

  • Proper ITC Claim – Helps buyers claim Input Tax Credit (ITC) in the correct period.

  • Smooth Business Operations – Avoids disputes with customers or vendors.

Time of Supply for Goods

The time of supply for goods is determined as per Section 12 of the CGST Act. The liability arises at the earliest of the following dates:

  1. Date of Issue of Invoice (or the last date on which the invoice should have been issued).

  2. Date of Receipt of Payment – The date when the supplier receives payment.

Example:

If a seller issues an invoice on 5th April 2025, but receives payment on 10th April 2025, the time of supply will be 5th April 2025 (earlier of the two dates).

Time of Supply for Services

The time of supply for services is determined as per Section 13 of the CGST Act. The liability arises at the earliest of the following dates:

  1. Date of Issue of Invoice (if issued within 30 days of providing the service).

  2. Date of Receipt of Payment – When payment is credited to the bank account.

  3. Date of Provision of Service – If invoice is not issued within the prescribed time.

Example:

A consultant provides services on 10th July 2025, issues an invoice on 20th July 2025, and receives payment on 25th July 2025.
The time of supply will be 20th July 2025 (date of invoice issued within the prescribed time).

Time of Supply under Reverse Charge Mechanism (RCM)

When GST is payable under Reverse Charge Mechanism (RCM), the time of supply rules are slightly different.

  • For Goods:

    • The date of receipt of goods, or

    • The date of payment, or

    • 30 days from the date of invoice, whichever is earliest.

  • For Services:

    • The date of payment, or

    • 60 days from the date of invoice, whichever is earlier.

Time of Supply for Vouchers

If goods or services are supplied through vouchers, the time of supply is:

  • Date of Issue of Voucher – If supply is identifiable at that point.

  • Date of Redemption of Voucher – In all other cases.

Changes in Tax Rate and Time of Supply

When there is a change in the GST rate, special provisions are applied to determine the time of supply to decide which rate is applicable (before or after the change).

For example, if goods are supplied before a rate change but the invoice is issued later, you must carefully determine the applicable rate based on the timing of the event (supply, invoice, or payment).

Compliance and Documentation

To ensure correct determination of time of supply, businesses must:

  • Issue Invoices on Time – Follow GST rules for invoice timing (goods: at time of removal, services: within 30 days).

  • Maintain Payment Records – Keep track of payment receipts and bank credit dates.

  • File Returns Accurately – Report supplies in the correct tax period (GSTR-1 and GSTR-3B).

  • Reconcile Regularly – Cross-check books of accounts, invoices, and payments.

Common Mistakes to Avoid

  • Delaying invoice issuance beyond the prescribed time.

  • Considering payment date instead of invoice date when invoice is issued on time.

  • Not tracking advances received for services (which trigger GST liability).

  • Ignoring rate change rules while determining tax liability.

Final Thoughts

The Time of Supply under GST is the foundation of correct tax calculation and compliance. A small error in determining the time of supply can lead to late fees, interest, and compliance issues.

By keeping proper records, issuing invoices on time, and reconciling regularly, businesses can ensure timely tax payments and avoid unnecessary disputes. Understanding these rules is essential for smooth GST compliance in 2025 and beyond.

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