Time of Supply

Time of Supply

Meaning of It means the date on which the charging event has occurred.
Time of Supply
As a result, the rate of CGST/SGST or IGST or UTGST will be
decided in accordance with the time of supply.

Based on time of supply we will also determine the due date of

payment of GST.

Relevant Section 12 Time of Supply of Goods

Sections Section 13 Time of Supply of Services
Section 14 Method of determining the time of supply in case there is a
change in the rate of tax on supply of goods or services

Time of Supply of Goods u/s 12

List of Contents:

Section 12 provides for the determination of time of supply in the following situations:
1. Supply of goods under forward charge;
2. Supply of goods under reverse charge;
3. Supply of vouchers that can be used to pay for goods;
4. Residual cases;
5. Addition to value by way of interest or late fee or penalty for delayed payment.

1. Supply TOS= Due Date of Invoice or Date of Invoice, whichever is earlier.

of goods under
forward charge Note: TOS and Liability to pay GST will be calculated only for the goods
billed in invoice and not for any larger quantity as may be present in any
contract between parties.

Example:

A Ltd. enters into an agreement with B Ltd. to supply 100 kg of raw

material. However, A Ltd. supplies only 80 kg of raw material and issues
the invoice for the same. Here, the supply would be deemed to have been
made in respect of 80 kg of raw material, i.e. to the extent covered by the
invoice. Therefore, the provisions relating to time of supply will only be
applicable to supply of 80 kg of raw material and not for entire 100 kg of
raw material.

Due date of Case 1: where supply involves movement of goods

Invoice The invoice needs to be issued either before or at the time of removal of
goods.

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Example: Sphinx Pvt. Ltd. enters into a contract for supply of 100 office
chairs @ ` 15,000 with Joy Sales on 21st August. Chairs are removed
from the warehouse of Sphinx Pvt. Ltd. on 5th September along with the
invoice issued on same date. Joy Sales has paid 30% of the total contract
value on 21st August; balance 70% is paid after delivery of chairs on 10th
September. Since the invoice is issued on the date of removal of goods,
it is issued within the prescribed time limit and hence, time of supply for
payment of tax on entire contract value of ` 15,00,000 is the date of issue
of invoice, i.e. 5th September. No GST will be payable at the time of
receipt of advance of ` 4,50,000 received on 21st August.

Case 2: where supply does not involve movement of goods

The invoice needs to be issued either before or at the time of delivery of
goods/ making goods available to recipient.

Case 3: where continuous supply of goods take place

The invoice should be issued before or at the time of issuance of
periodical statement/receipt of periodical payment

Case 4: In case of goods sent or taken on approval for sale or return

Invoice should be issued before or at the time of supply or 6 months from
the
date of removal, whichever is earlier

Example: B Ltd. sells goods to C Ltd. on 10th June. The invoice for the
same is issued on the same day. Payment for the goods is received on
20th June. Time of supply of goods for the purpose of payment of tax is
10th June being the date of issue of invoice in terms of section 31.

Example: B Ltd. sells goods to C Ltd. on 10th June. The invoice for the
same is issued on 10th June. Payment for the goods is received on 5th
June. Time of supply of goods for the purpose of payment of tax is 10th
June being the date of issue of invoice in terms of section 31.

Example: B Ltd. sells goods to C Ltd. on 10th June. The invoice for the
same is issued on 12th June. Payment for the goods is received on 20th
June. Time of supply of goods for the purpose of payment of tax is 10th
June being the last date on which invoice ought to have been issued in
terms of section 31.

Example: B Ltd. enters into a contract with C Ltd. for supply of goods
over a period of one year starting from the month of January. As per the
contract, C Ltd. makes payment on 10th day of each month. B Ltd. issues
the invoice on the same day. Time of supply of the goods for the purpose
of payment of tax will be 10th day
of each month.

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 Example: B Ltd. sends goods to C Ltd. for sale on approval basis on 10th
January. C Ltd. approves the goods on 15th August. B Ltd. should issue
the invoice on 10th July as the supply gets fructified after six months from
the date of removal. Time of supply of the goods for the purpose of
payment of tax is 10th July being the last date on which invoice ought to
have been issued in terms of section 31.

Question 1.
A machine has to be supplied at site. It is done by sourcing various components from vendors
and assembling the machine at site. The details of the various events are:
17th September: Purchase order with advance of ` 50,000 is received for machine worth ` 12
lakh and entry duly made in the seller’s books of account
20th October: The machine is assembled, tested at site, and accepted by buyer
23rd October: Invoice raised
4th November: Balance payment of ` 11,50,000 received
Determine the time of supply(ies) in the above scenario for the purpose of payment of tax.

Answer: 20th October

Question 2.
Gas is supplied by a pipeline to the recipient. The supply is to be made for a period of one year.
Monthly payments are to be made by the recipient as per the contract. The details of the
payment made are:
• July 5, August 5, September 5
• Payments of ` 2 lakh made in each month
Determine the time of supply for the purpose of payment of tax.

Answer: July 5, August 5 and September 5 respectively

2. Supply TOS= earlier of the following 3 dates:

of goods under
reverse charge ➢ Date on which the goods are received, or
➢ Date on which payment is recorded in the books of account of the
recipient, or the date on which the same is debited in his bank account,
whichever is earlier, or
➢ Date immediately following 30 days from the date of issue of invoice
(or document by some other name in lieu of invoice) by the supplier.

If it is not possible to determine the time of supply by using these

parameters, then the time of supply will be the date of entry of goods in
the books of account of the recipient of supply.

Example: Ltd. sells goods to C Ltd. on 4th June. The goods are taxable
under reverse charge. Invoice for the same is issued on 4th June. C Ltd.
receives the goods on 12th June. C Ltd. records the payment in the books
of account on 30th June and the same is debited from the bank account
of C Ltd. on 2nd July. Time of supply of the goods is 12th June being the
earliest of the three stipulated dates namely, date of receipt of goods, date

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 of payment and date immediately following 30 days of issuance of
invoice.

B Ltd. sells goods to C Ltd. on 4th June. The goods are taxable under
reverse charge. Invoice for the same is issued on 4th June. C Ltd. receives
the goods on 6th July. C Ltd. records the payment in the books of account
on 21st July and the same is debited from the bank account of C Ltd. on
31st July. Time of supply of the goods is 5th July being the earliest of the
three stipulated dates namely, date of receipt of goods, date of payment
and date immediately following 30 days of issuance of invoice.

B Ltd. sells goods to C Ltd. on 4th June. The goods are taxable under
reverse charge. Invoice for the same is issued on 4th June. C Ltd. receives
the goods on 27th June. C Ltd. records the payment in the books of
account on 10th June and the same is debited from the bank account of
C Ltd. on 2nd July. Time of supply of the goods is 10th June being the
earliest of the three stipulated dates namely, date of receipt of goods, date
of payment and date immediately following 30 days of issuance of
invoice.

Question 3.
Determine the time of supply from the given information.
May 4: Supplier invoices goods taxable on reverse charge basis to Bridge & Co. (30 days from
the date of issuance of invoice elapse on June 3)
May 12: Bridge & Co receives the goods
May 30: Bridge & Co makes the payment

Answer: May 12

Question 4.
Determine the time of supply from the given information.
May 4: Supplier invoices goods taxable on reverse charge basis to Pillar & Co. (30 days from
the date of issuance of invoice elapse on June 3)
June 12: Pillar & Co receives the goods, which were held up in transit
July 3: Payment made for the goods

Answer: June 4

3. Time of Case 1: Date of issue of the voucher, if the supply that it covers is
supply of identifiable at that point.
vouchers
exchangeable Case 2: Date of redemption of the voucher, if the supply that it covers
for goods is NOT identifiable at that point.

Example:
1. Acme sales Limited sells food coupons to a company. The company gives these
coupons to its employees as part of the agreed perquisites. The coupons can be
redeemed for purchase of any item of food /provisions in the outlets that are part of the

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 program. As the supply against which the coupon will be redeemed is not known on the
date of the sale of the coupon, the time of supply of the coupon will be the date on
which the employee redeems it against food / provision items of his choice.

2. With each purchase of a large pizza during the Christmas week from Perfect Pizza, one
can buy a voucher for ` 20 which will be redeemable till 5th Jan for a small pizza. As
the supply against which the voucher will be redeemed is known on the date of issue of
the vouchers, the time of supply is the date of issue of the voucher.

4. Time of Case 1: In case of periodical return, Due date for filing of the periodical
supply of goods return.
in residual
cases Case 2: In case of no periodical return, date on which GST is paid.

5. Time of The date on which the supplier receives such addition in value.
supply in case of
enhancement in
value on
account of
interest/late fee
etc. for delayed
payment of
consideration

Example:
Radha Traders sold goods to Shyam Sales on 6th June with a condition that interest @ 2% per
month will be charged if Shyam Sales failed to make payment within 15 days of the delivery
of the
goods. Goods were delivered alongwith the invoice, on 6th June. Shyam Sales paid the
consideration for the goods on 6th July along with applicable interest. Time of supply for the
goods sold is the date of issue of invoice i.e., 6th June and the time of supply for addition in
value by way of interest is the date when such addition in value is received by Radha Traders
i.e., 6th July.

6. Time of Date of issue of invoice/ last date for issue of invoice OR, receipt of
supply in case payment, whichever is earlie
of actionable
claims

Example: M/s Pocker Pokiri Pvt. Ltd. Supplier of online money gaming registered person under
GST located in New Delhi. Supplied online money gaming (i.e. goods) on 1st January 2024 to
Mr. Appavi of Chennai.
Case 1: Invoice issued on 1st February 2024 and payment received on 26th December 2023.
Case 2: Invoice issued on 1st February 2024 and payment received on 26th March 2024.
Find the time of supply in the above two cases?
Answer: Case 1: time of supply is 26th December 2023
Case 2: time of supply is 1st January 2024

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 Time of Supply of Services u/s 13

List of Contents:

Section 13 provides for the determination of time of supply in the following situations:
1. Supply of services under forward charge;
2. Supply of services under reverse charge;
3. Supply of vouchers that can be used to pay for services;
4. Residual cases;
5. Addition to value by way of interest or late fee or penalty for delayed payment.

1. Supply Case 1: If the invoice was issued within 30 days of completion of

of services service
under forward
charge Date of issue of invoice or date of receipt of payment, whichever is
earlier.

Case 2: If the invoice was issued after 30 days of completion of

service

Date of provision of service or date of receipt of payment, whichever is

earlier.

If the above two methods are not applicable, the time of supply will be
the date on which the recipient of service shows receipt of the service in
his books of account.

Date of receipt the date on which the payment is recorded in the books of account of the
of payment supplier that receives the payment, or the date on which the payment is
credited to the supplier’s bank account, whichever is earlier.

45 days in place 30 days will become 45 days in case of insurance companies/ banking
of 30 days companies/ financial institutions including NBFCs.

Time of Supply Case 1: If the invoice was issued within time

in case of
Continuous Date of issue of invoice or date of receipt of payment, whichever is
Supply of earlier.
Services
Case 2: If the invoice was issued after due time

Date of provision of service or date of receipt of payment, whichever is

earlier.

If the above two methods are not applicable, the time of supply will be
the date on which the recipient of service shows receipt of the service in
his books of account.

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 What is Due Time?

In case of continuous supply of services, the invoice should be issued

either:
(i) on/ before the due date of payment - where the due date of payment
is ascertainable from the contract or
(ii) before/ at the time when the supplier of service receives the
payment - where the due date of payment is not known
(iii) on/ before the date of completion of the milestone event – where
the payment is linked to completion of an event

What is Continuous Supply of service?

Continuous supply of services are provided, or agreed to be provided,

continuously or on recurrent basis, under a contract, for a period
exceeding 3 months with periodic payment obligations and includes
supply of such services as the Government may notify.

Example:

1. Mohit Khanna & Sons is a firm of management consultants. The firm enters into a
contract with Spark Pvt. Ltd. on 1st September for providing consultancy services.
Provision of service gets completed on 15th September. Invoice for the service is issued
on 20th September and payment is received on 10th October. Since invoice is issued
within 30 days from the date of supply of service, time of supply is the date of issue of
invoice, i.e. 20th September being earlier than the date of receipt of payment.

2. If in the above example, invoice is issued on 25th October, the time of supply will be
the date of provision of service, i.e. 15th September being earlier than the date of receipt
of payment. This would be so as the invoice is not issued within 30 days from the date
of supply of service.

3. A Ltd. provides services to B Ltd. on 10th June. A Ltd. Issues the invoice for the services
on 15th June. Payment is received in the bank account of A Ltd. on 20th June and is
recorded in the books of account of A Ltd. on 30th June. Date of receipt of payment is
20th June being the earlier of two stipulated dates namely, date on which the payment
is recorded in the books of account of the supplier and date on which the payment is
credited to the supplier’s bank account. Since the invoice is issued within 30 days from
the date of supply of service, time of supply of services is 15th June being the earlier
of the two stipulated dates namely, date of issuance of invoice and date of receipt of
payment.

4. A Ltd. provides services to B Ltd. on 10th June. A Ltd. issues the invoice for the services
on 7th July. Payment is received in the bank account of A Ltd. on 20th June and is
recorded in the books of account of A Ltd. on 30th June. Date of receipt of payment is
20th June being the earlier of two stipulated dates namely, date on which the payment
is recorded in thbooks of account of the supplier and date on which the payment is

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 credited to the supplier’s bank account. Since the invoice is issued within 30 days from
the date of supply of service, time of supply of services is 20th June being the earlier
of the two stipulated dates namely, date of issuance of invoice and date of receipt of
payment.

5. A Ltd. provides services to B Ltd. on 10th June. A Ltd. issues the invoice for the services
on 15th July. Payment is received in the bank account of A Ltd. on 20th June and is
recorded in the books of account of A Ltd. on 30th June. Here, invoice is not issued
within 30 days of provision of service. Therefore, time of supply of services is 10th
June being the earlier of the two stipulated dates namely, date of provision of service
and date of receipt of payment.

Question 5.
Determine the time of supply from the following particulars:
6th May: Booking of convention hall, sum agreed ` 15000, advance of ` 3000 received
15th September: Function held in convention hall
27th October: Tax invoice issued for ` 15000, indicating balance of ` 12000 payable
3rd November: Balance payment of ` 12000 received

Answer:
The time of supply of service to the extent of ` 3,000 is 6th May as the date of payment of `
3000 is earlier than the date of provision of service. The time of supply of service to the extent
of the balance ` 12,000 is 15th September which is the date of provision of service.

Question 6.
Investigation shows that ABC & Co carried out service of cleaning and repairs of tanks in an
apartment complex, for which the Apartment Owners’ Association showed a payment in cash
on 4th April to them against work of this description. The dates of the work are not clear from
the records of ABC & Co. ABC & Co have not issued invoice or entered the payment in its
books of account.

Answer: Time of supply will be 4th April, the date on which the Apartment Owners’
Association records the receipt of service in its books of account.

Excess In case of Services Only, For a payment of up to ` 1,000 received in

payment upto ` excess of the invoice value, the supplier can choose to take the date of
1000: Option of invoice issued with respect to such excess amount as the time of supply
taking invoice of services in relation to this excess value.
date as time of
Supply

Example:
A telephone company receives ` 5000 against an invoice of ` 4800. The excess amount of ` 200
can be adjusted against next invoice. The company has the option to take date of next invoice
as the time of supply of service in relation to the amount of ` 200 received in excess against
earlier invoice of ` 4800.

2. Time of Case 1: Services received from associated enterprises located outside

supply of India

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 services under
reverse charge The time of supply will be the date of payment for the service, or the date
of entry of the service in the books of account of the recipient, whichever
is earlier.

Case 2: Other cases

The time of supply for such service will be the earlier of the following:
➢ Date of payment, or
➢ Date immediately following 60 days from date of issue of invoice (or
any other document in lieu of invoice) by the supplier.

If it is not possible to determine the time of supply by using these

parameters, then the time of supply will be the date of entry of the service
in the books of account of the recipient of supply.

Example:
1. A Ltd. provides services to B Ltd. on 10th June. The services are taxable under reverse
charge. A Ltd. issues the invoice for the services on 15th June. Payment is debited from
the bank account of B Ltd. on 20th June and is recorded in the books of account of B
Ltd. on 30th June. Time of supply of services is 20th June being the earliest of the three
stipulated dates namely, date on which payment is recorded in the books of account of
recipient of services, date on which payment is debited from the bank account of the
recipient of services and date immediately following 60 days since issue of invoice.

2. A Ltd. provides services to B Ltd. on 10th June. The services are taxable under reverse
charge. A Ltd. issues the invoice for the services on 15th June. Payment is debited from
the bank account of B Ltd. on 20th September and is recorded in the books of account
of B Ltd. on 15th September. Time of supply of services is 15th August being the
earliest of the three stipulated dates namely, date on which payment is recorded in the
books of account of recipient of services, date on which payment is debited from the
bank account of the recipient of services and date immediately following 60 days since
issue of invoice.

3. A Inc., a foreign company, and B Ltd., an Indian company, are associated enterprises.
A Inc. provides technical services to B Ltd. Vide an email dated June 4th, A Inc. informs
B Ltd. the cost of technical services provided to it. B Ltd. transfers the payment to A
Inc. on 12th August. Time of supply of services is 12th August being the date of
payment as there is no prior entry of the amount in the books of account of B Ltd.

Question 7.
Determine the time of supply from the given information. (Assume that service being supplied
is taxable under reverse charge)
May 4: The supplier of service issues invoice for service provided. There is a dispute about
amount payable, and payment is delayed.
August 21: Payment made to the supplier of service

Answer: July 4 will be the time of supply

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Question 8.
Determine the time of supply from the given information.
May 4: A German company issues email informing its associated enterprise, ABC Ltd. of the
cost of technical services provided to it, which was recorded in ABC Ltd.’s books on May 1
July 2: ABC Ltd transfers the amount to the account of the German company.

Answer: May 1.

3. Time of Case 1: Date of issue of the voucher, if the supply that it covers is
supply of identifiable at that point.
vouchers
exchangeable Case 2: Date of redemption of the voucher, if the supply that it covers
for services is NOT identifiable at that point.

Example:
Best Hospitality Services enters into agreement with Drive Marketing Ltd by which Drive
Marketing Ltd. markets Best Hospitality Services’ hotel rooms and sells coupons / vouchers
redeemable for a discount against stay in the hotel. As the supply against which the voucher
will be redeemed is identifiable, the time of supply of the voucher will be its date of issue.

4. Time of Case 1: In case of periodical return, Due date for filing of the periodical
supply of return.
services in
residual cases Case 2: In case of no periodical return, date on which GST is paid.

5. Time of The date on which the supplier receives such addition in value.
supply in case of
enhancement in
value on
account of
interest/late fee
etc. for delayed
payment of
consideration

CHANGE IN RATE OF TAX IN RESPECT OF SUPPLY OF GOODS OR SERVICES

u/s 14

When there is a change in effective rate of tax, we have to identify -

the date of change in rate of tax,
the date of supply of goods or services,
the date of issue of invoice, and
the date of receipt of payment
The time of supply is determined according to a combination of these dates.

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The 3 markers for identifying time of supply are actual supply, invoice and payment. These can
occur in differing sequences. Their occurrence before and after the change of effective rate of
tax determines the time of supply of the service.

Of the three markers (supply, invoice, payment), -

if issue of invoice and receipt of payment are both before the change in rate, the time of
supply is the date of the earlier of these two events;
if supply and issue of invoice are before the change in rate, the date of issue of invoice is the
time of supply;
if supply and receipt of payment are before the change in rate, the date of receipt of payment
is the time of supply.
If supply and receipt of payment are after the change in rate, the date of receipt of payment
is the time of supply;
If issue of invoice and receipt of payment are after the change in rate, the date of the earlier
of these two events is the time of supply;
If supply and issue of invoice are after the change in rate, the date of issue of invoice is the
time of supply.

In short,
If any two of them occur before the change in rate of tax, the time of supply will fall in the
period prior to change in rate of tax i.e., old rate will be applicable. However, if any two of
them occur after the change in rate of tax, the time of supply will fall in the period after the
change in rate of tax i.e., new rate will be applicable.

Example:
1. Mr. A, an interior decorator, designs and renovates the office of XYZ in June. The
invoice is to be raised after approval of the work. In the meantime, the rate of tax is
changed on 5th July. Invoice is raised and payment made later in July. Here, the time
of supply is after the change in rate of tax, though the service was completed prior to
the change.

2. A Ltd. makes custom-made precision tools for which it takes full advance with the
purchase order. One such order is received on 13th April and full amount is paid with
the order. The tools are manufactured and delivered on 22nd May. Invoice is also issued
on the same day. In the meanwhile, rate of tax was increased on the tools of this
description from 20th May onwards. Here, increased rate of tax will be applicable as
goods are supplied and invoice issued after 20th May.

Date of crediting of payment in bank account to be the “date of receipt of payment” if

such crediting takes place after 4 working days of change in rate of tax

Where the payment is credited in the bank account after 4 working days from the date of change
in the rate of tax, the date of receipt of payment will be the date of credit in the bank account.
In other words, in such a case, the date of recording the payment in the books of account will
not be considered as the date of receipt of payment even though if the same precedes the date
of crediting of payment in the bank account.

Example:
Rate of tax is changed on 10th July. Receipt of payment is recorded in the books of account of
the supplier on 8th July. The payment is credited in the supplier’s bank account on 15th July.

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The Bank was open all days between 10th and 15th July. Here, the date of receipt of payment
is 15th July.

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 Special Cases

time of supply The circular has clarified the issue of the Time of Supply for the purpose
regarding the of payment of tax on the deferred annuity payments received by the
supply of concessionaire from NHAI for the construction of road and operation and
services of maintenance (O&M) thereof under the HAM model.
construction of
road and In HAM contracts, a certain portion of payment linked to construction is
maintenance payable during the construction and the remaining payment is received
thereof under in instalments over the concession period as per the payment schedule.
the National However, the revenue authorities have been advancing the view that GST
Highway is payable on the percentage of construction completion method. The
Projects of circular has clarified the time of supply provisions mainly considering
National that the HAM contract should be considered holistically as a single
Highways contract for both construction and O&M services. It cannot be artificially
Authority of split based on payment terms.
India (NHAI) in
the Hybrid The following clarifications have been provided.
Annuity Mode
(HAM) model: a. The tax liability on the concessionaire under the HAM contract,
including on the balance portion linked to the construction portion will
arise at the time of issuance of invoice or receipt of payment, whichever
is earlier [if the invoice is issued on or before the specified date or date
of completion of the event specified in the contract].

b. If the invoices are not issued on or before the specified date or date of
completion of the event as specified in the contract, the tax liability will
arise on the date of provision of the said service or date of receipt of
payment whichever is earlier.

c. Instalments or annuity payable by NHAI to the concessionaire includes

the interest component. The interest amount should also be includible in
the taxable value for the purpose of payment of tax on the annuity or
instalment in terms of section 15(2)(d) of the CGST Act

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Comprehensive Example: Time of Supply for Deferred Annuity Payments under HAM Model:

Project Details
1. Concessionaire: XYZ Infra Ltd. (Supplier of service)

2. Authority: National Highways Authority of India (NHAI) (Recipient of the service)

3. Project Value: ₹1,000 crores

4. HAM Model Payment Terms:

• Construction Phase (2 years):

40% of the project cost (₹400 crores) to be paid in milestone-based instalments, meaning the due date
of payment is linked to the completion of specific events.

• Deferred Annuity Phase (15 years):

Remaining 60% (₹600 crores) to be paid as annual instalments, including interest. The due date of
payment, as mentioned in the contract, is 1st April every year.

• Annual Instalment: ₹50 crores (₹40 crores principal + ₹10 crores interest)

Application of Time of Supply Rules

As per Section 13(2) of the CGST Act for continuous supply of services:
1. If the invoice is issued within the specified time (on or before the due date of payment linked to the
completion of an event):
• The time of supply is the earlier of the date of issue of the invoice or the date of receipt of payment.
2. If the invoice is not issued within the specified time:
• The time of supply arises on the date of provision of service or the date of receipt of payment,
whichever is earlier.

Phase 1: Construction Phase

Scenario 1: First Milestone Payment
• Milestone Completed: 25% of construction completed on 31st December 2024.
• Invoice Raised: 5th January 2025 for ₹100 crores (25% of ₹400 crores).
• Payment Received: 15th January 2025.

Time of Supply Determination:

• Since the invoice was not issued within the specified time (on or before 31st December 2024), the
time of supply is 31st December 2024 (date of milestone completion).

Scenario 2: Second Milestone Payment

• Milestone Completed: 75% of construction completed on 1st April 2025.
• Invoice Raised: 31st March 2025 for ₹300 crores (75% of ₹400 crores).
• Payment Received: 15th May 2025.

Time of Supply Determination:

• Since the invoice was issued on or before the due date of payment (1st April 2025), the time of
supply is 31st March 2025 (date of invoice).

Phase 2: Deferred Annuity Payments

Scenario: First Annuity Payment

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• Annuity Payment Due: ₹50 crores (₹40 crores principal + ₹10 crores interest).
• Service Period Covered: 1st April 2025 to 31st March 2026.
• Invoice Raised: 1st April 2026.
• Payment Received: 10th April 2026.

Time of Supply Determination:

• Since the invoice was issued on or before the due date of payment (1st April 2026), the time of
supply is 1st April 2026 (date of invoice).

Taxable Value: ₹50 crores (including ₹10 crores interest).

GST Computation (Assuming 18%):
• GST = ₹50 crores × 18% = ₹9 crores.
• Due date for tax payment: 20th May 2026.

Phase 3: O&M Services

Scenario: Quarterly O&M Payment
• Service Provided: January to March 2026.
• Due Date of Payment: 10th April 2026 (as per the contract).
• Invoice Raised: 31st March 2026 for ₹5 crores.
• Payment Received: 10th April 2026.

Time of Supply Determination:

• Since the invoice was issued on or before the due date of payment (10th April 2026), the time of
supply is 31st March 2026 (date of invoice).
Taxable Value: ₹5 crores.
GST Computation (Assuming 18%):
• GST = ₹5 crores × 18% = ₹0.9 crores.
• Due date for tax payment: 20th April 2026

Summary of GST Liability

Key Points: 1. Deferred Annuities: Time of supply is aligned with invoice issuance or
payment, ensuring clarity for GST compliance.
2. Interest Component: Interest is includible in the taxable value.
3. Unified Contract: Construction and O&M services are treated as a
single supply, avoiding artificial splitting of GST liability.
4. Continuous Supply of Services: Provisions ensure GST compliance
without ambiguity regarding phased payments.

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Clarification on the time of supply of services of spectrum usage and other similar services under
GST

The circular clarifies the time of supply for the GST payment on spectrum allocation services when the
telecom operator opts for deferred payment in instalments. The spectrum allocation service provided
by the Department of Telecommunications (DoT) is treated as a continuous supply of services under
section 2(33) of the CGST Act.

The circular clarifies that the Frequency Assignment Letter issued by the DoT which details the auction
results and payment options, is not considered as an invoice but it is only a bid acceptance document.
Hence, the GST liability arises at the time the instalment payments are due or made, whichever is
earlier. GST is payable on these spectrum allocation services under reverse charge mechanism as per
Notification No. 13/2017-Central Tax (Rate) dated 28th June, 2017.

Time of Supply • Upfront Payments: GST is payable when the upfront payment is made
under different or due, whichever is earlier.
Payment • Deferred Payments: GST is payable on deferred payments as and when
Options: they are due or made, whichever is earlier.
Example: Time Scenario Overview
of Supply for 1. Service Provided: Spectrum allocation services by the Department of
Spectrum Telecommunications (DoT) to a telecom operator.
Allocation 2. Payment Mechanism: Reverse charge mechanism (RCM) as per
Services Notification No. 13/2017-Central Tax (Rate) dated 28th June 2017.
3. Payment Options: The telecom operator can choose between upfront
payment or deferred payment in instalments

Case 1: Upfront Payment

• Details:
• Spectrum Allocation Value: ₹500 crores.
• Payment Due Date: 1st July 2024.
• Payment Made: 25th June 2024.

Time of Supply Determination:

• Under Section 13(2) of the CGST Act, the time of supply is earlier of:
• Due Date of Payment: 1st July 2024.
• Actual Payment Date: 25th June 2024.

Time of Supply: 25th June 2024.

GST Payable Date: 20th July 2024 (due by the 20th of the following
month under RCM).

Case 2: Deferred Payment

Scenario: First Instalment
• Details:
• Spectrum Allocation Value: ₹500 crores, divided into 5 annual
instalments of ₹100 crores each. • First Instalment Due Date: 1st July
2024.
• Payment Made: 15th July 2024.

Time of Supply Determination:

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 • Under Section 13(2) of the CGST Act, the time of supply is earlier of:
• Due Date of Payment: 1st July 2024.
• Actual Payment Date: 15th July 2024.
Time of Supply: 1st July 2024.
GST Payable Date: 20th August 2024 (due by the 20th of the following
month under RCM)

Scenario: Subsequent Instalments

• Second Instalment Details:
• Due Date: 1st July 2025.
• Payment Made: 1st June 2025.
Time of Supply Determination:
• Time of supply is earlier of:
• Due Date of Payment: 1st July 2025.
• Actual Payment Date: 1st June 2025.
Time of Supply: 1st June 2025.
GST Payable Date: 20th July 2025.

Key Notes 1. Reverse Charge Mechanism (RCM): The telecom operator is liable to
pay GST on the spectrum allocation services under RCM.
2. GST Rate: Applicable GST rate for spectrum services is assumed to be
18%.

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2.24
Change in Rate of Tax in respect of supply of services Sec. 14 of the CGST Act, 2017 w.e.f. 15.11.2017:

Date of receipt Normally the date of receipt of payment is the date of credit in the bank
of payment in account of the recipient of payment or the date on which the payment is
case of change entered into his books of account, whichever is earlier.
in rate of tax
However, in cases of change in rate of tax, the date of receipt of payment
is the date of credit in the bank account if such credit is after four working
days from the date of change in rate of tax.

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Illustration 19 X Pvt. Ltd. engaged in providing taxable services by way of training and coaching
activities in relation of information Accounting and Auditing since, 1st July 2017 has the following
details in respect of that activity for the month of September, 2024

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Solved Case 1
SP Singla Constructions Pvt. Ltd. (GST AAR Gujarat - 2022):
Question on which Advance Ruling sought: SP Singla Constructions Pvt. Ltd. desires to obtain Advance
Ruling on the question as to what is the time of supply for the purpose of discharge of GST under the
CGST Act, 2017 in respect of Mobilization Advance (hereinafter referred to as ‘said advance’) received
by it for construction services provided by it? SP Singla Constructions Pvt. Ltd. received advance from
its recipient of service for procurement of goods.

Advance Ruling: SP Singla Constructions Pvt. Ltd. does not contest the taxability on said Advance, but
is before us for its deferment from date of its receipt to date of issue of invoice. We pass the Ruling
based on Section 13(2) CGST Act read with its explanation (i). Time of Supply, on said Advances
received by SPSC for Supply of its Service, is the date of receipt of said advance.
Advance is for procurement of Goods. SP Singla Constructions is Service provider, supplying Works
Contract Service. We refer to Schedule II (6)(a) CGST Act, wherein works contract shall be treated as
supply of service. The Contract submitted before us is also for the same. The Payment terms and
conditions are part and parcel of the contract. We find it neither tenable to colour a Service Contract

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as Goods supply contract nor rational to misrepresent a Service contract as Goods supply contract to
hoodwink Section 13(2) CGST Act and defer payment of Tax.

Multiple Choice Questions

1. Find the time of supply from the following where date of supply of service is 7th September 20XX
(a) Date of invoice 30th Oct 20XX
(b) Date of payment received by way of cheque and the entry for receipt of payment is recorded in
books of accounts 10th Oct 20XX
(c) Amount credited to bank account of supplier 12th Oct 20XX
(d) 7th September 20XX

2. What is time of supply of service with respect to receipt of amount in excess of the invoice amount.
(a) Date of issue of invoice by the supplier, if the invoice is issued within the period prescribed u/s 31
or the date of receipt of payment, whichever is earlier; or
(b) Date of provision of service, if the invoice is not issued within the period prescribed u/s 31 or the
date of receipt of payment, whichever is earlier; or
(c) Date on which the recipient shows the receipt of services in his books of account, in a case where
the provisions of clause (a) or clause (b) do not apply:
(d) All (a), (b) & (c)

3. What is time of supply of goods, in case of forward charge?

(a) Date of issue of invoice
(b) Due date of issue of invoice
(c) Date of receipt of consideration by the supplier
(d) Earlier of (a) & (b)

4. Mr. A, who has opted for composition levy, supplies goods worth ` 24,300 to Mr. B and issues an
invoice dated 25.09.20XX for ` 24,300. and Mr. B pays ` 25,000 on 1.10.20XX against such supply of
goods. The excess ` 700 (being less than ` 1,000) is adjusted in the next invoice for supply of goods
issued on 5.01.20XX. Identify the time of supply and value of supply:
(a) For `25,000 – 1.10.20XX
(b) For ` 24,300 – 25.09.20XX and for ` 700 – 1.10.20XX
(c) For ` 24,300 – 25.09.20XX and for ` 700 – 5.10.20XX.
(d) (b) or (c) at the option of supplier, who has opted for composition levy

5. Value of services rendered is ` 1,00,000/ on 1st October 2024. Date of issue of invoice is 5th October
2024. Advance Received is ` 25,000/- on 20th September 2024. Balance amount received on 7th
October 2024. What is the time of supply for ` 1,00,000/-
(a) 5th October 2024 for ` 1,00,000/-
(b) 20th September 2024 for ` 1,00,000/-
(c) 20th September 2024- ` 25,000/- and 5th October 2024 for ` 75,000/-
(d) 20th September 2024- ` 25,000/- and 7th October 2024 for ` 75,000/-

6. There was increase in tax rate from 12% to 18% w.e.f.1.09.2024. Which of the following rate is
applicable when services are provided after change in rate of tax in September 2024, but invoice issued
and payment received, both in August 2024:
(a) 12% as it is lower of the two
(b) 18% as it is higher of the two
(c) 12% as invoice and payment were received prior to rate change
(d) 18% as the supply was completed after rate change

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7. ABC Ltd has purchased for its customer 50 vouchers date 20th Aug 20XX worth ` 500 each from Ram
Pvt. Ltd. a footwear manufacturing company. The vouchers were issued by Ram Pvt. Ltd on 20th Sep
20XX. The vouchers can be encashed at retail outlets of Ram Pvt. Ltd. The employees of ABC Ltd.
enchased the same on 1st Oct 20XX. Determine the time of supply of vouchers.
(a) 20th Aug 20XX
(b) 20th Sep 20XX
(c) 1st Oct 20XX
(d) None of the above

8. What is the maximum time limit for issue of tax invoice in case of insurance service providers and
banks?
(a) 30 days
(b) 45 days
(c) At the time when supply ceases
(d) At the time when supply started

9. Determine the amount of GST in case of supply of service of ` 10,00,000 on 4th Sep 20XX and invoice
has also been issued on the same date. The date of payment is 30th Aug 20XX. The CGST rate has been
increased from 5% to 12% w.e.f. 1st Sep 20XX.
(a) `50,000
(b) `1,00,000
(c) `70,000
(d) `1,20,000

10. Which notification removed the requirement of payment of tax on advance receipt in case of
supply of
goods?
(a) Notification No. 10/2017 Central Tax, dated 15th November 2017
(b) Notification No. 66/2017 Central Tax Dated 15th November 2017
(c) Notification No. 77/2017 Central Tax Dated 15th November 2017
(d) Notification No. 66/2017 Central Tax Dated 15th November 2018

11. Mr. A entered into a contract with Mr. B & agreed to make the payment by 30th Sep 20XX. If the
payment is not made in time, then he shall pay late fees @`200 per day. No payment of late fees has
been made so far. What shall be the time of supply in respect of the late fees due on Mr. A.
(a) September 20XX
(b) October 20XX
(c) Time of supply has not arisen
(d) None of the above

12. There was decrease in tax rate from 28% to 18% w.e.f. 1.09.2024. Which of the following rate is
applicable if the supplier has not opted for composition levy and supplies goods to Customer? Further,
Goods were removed from its factory on 31.08.2024; delivered at buyer place on 2.02.2024; invoice is
issued on 31.08.2024 and payment is received on 4.09.2024.
(a) 18% as it is lower of the two
(b) 28% as date of invoice and dispatch of goods from factory, has happened before change of rate
(c) 18% as both, payment and completion of supply, has happened after change of rate
(d) none of the above

13. M/s Wanderlust Travels (P) Ltd. purchased a bus chassis from M/s Krishi Motors Ltd. for a
consideration of ` 90.00 lakh on 1st Jan 2024. M/s Wanderlust Travels (P) Ltd. sent the bus chassis for

2.35
body building to M/s Bhagwant Fabricators and paid in advance the total consideration of ` 25.00 lakh
on 15th Oct 2024. M/s Bhagwant Fabricators, after completing the bus body, informed M/s Wanderlust
Travels (P) Ltd for carrying out the inspection of the work done on 5th Nov 2024. M/s Wanderlust
Travels (P) Ltd. Visited the work shop of M/s Bhagwant Fabtricators on 8th Nov 2024 and confirmed
that the bus body was in accordance with the terms of the contract. The last date for issuing the invoice
by M/s Bhagwant Fabricators is
(a) 15th Oct 2024
(b) 8th Nov 2024
(c) 8th Dec 2024
(d) 5th Dec 2024

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