Library / Goods and Services Tax: The Professional's Master Guide

10. Time of Supply (Sections 12, 13 and 14)

Section 9 of the CGST Act levies tax on supplies but does not say when the tax becomes payable. Sections 12 and 13 fix the "time of supply" for goods and services, and section 14 decides the rate when the rate changes around a supply. The liability to pay tax arises at the time of supply. That date decides the tax period in which the supply is reported, the rate where rates change, the exchange rate under rule 34, and the start of interest under section 50 if tax is paid late.

Time of supply is linked to, but separate from, the time limit for issuing an invoice under section 31. The invoice date (or the last date for issuing it) is one of the events that fixes the time of supply. A late invoice does not move the time of supply to a later date.

10.1 Goods under forward charge

Under section 12(2), the time of supply of goods is the earlier of: (a) the date of issue of invoice, or the last date by which the invoice ought to have been issued under section 31(1); and (b) the date of receipt of payment. Section 31(1) requires the invoice before or at the time of removal of goods (where the supply involves movement) or delivery (in other cases).

Clause (b) no longer bites for most taxpayers. By Notification 66/2017-Central Tax dated 15 November 2017, all registered persons other than composition taxpayers pay tax on goods at the time of issue of invoice. So advances received for goods are not taxed on receipt. For goods sent on approval or sale-or-return, section 31(7) allows the invoice before or at the time of supply, or six months from removal, whichever is earlier.

Illustration 50: Invoice issued after removal of goods

Sharma Textiles Pvt. Ltd., Surat, removes fabric worth Rs. 6,00,000 (5%) on 28 March 2026, having received an advance of Rs. 2,00,000 on 10 March 2026. The invoice is raised on 2 April 2026.

Step 1: The advance on 10 March 2026 is not taxed (Notification 66/2017-Central Tax).

Step 2: The last date for issuing the invoice was the date of removal, 28 March 2026. Time of supply is 28 March 2026, not 2 April 2026.

Step 3: Tax of Rs. 30,000 (CGST Rs. 15,000 + SGST Rs. 15,000) belongs to March 2026. If reported in April, interest under section 50 runs from 21 April 2026.

10.2 Services under forward charge

Section 13(2) gives three situations:

Situation	Time of supply
Invoice issued within the period prescribed under section 31(2)	Earlier of date of invoice and date of receipt of payment
Invoice not issued within the prescribed period	Earlier of date of provision of service and date of receipt of payment
Neither applies	Date on which the recipient shows receipt of services in its books

Rule 47 of the CGST Rules prescribes 30 days from the date of supply of service for issuing the invoice, and 45 days for an insurer, banking company or financial institution including an NBFC. The date of receipt of payment is the earlier of the date of entry in the supplier's books and the date of credit in its bank account.

Advances for services are taxable on receipt. The supplier issues a receipt voucher (section 31(3)(d)) and pays tax in that month. If the rate is not known, rule 50 requires tax at 18%, and if the nature of supply is not known, it is treated as inter-State. Under the first proviso to section 13(2), where the supplier receives up to Rs. 1,000 more than the invoice amount, he may treat the date of the next invoice for that excess as its time of supply.

Illustration 51: Thirty-day rule and advance for services

Kavya and Associates, Pune, receives Rs. 1,18,000 (inclusive of 18% GST) on 15 May 2026 as an advance for a system audit, completes the audit on 10 June 2026 and raises the final invoice for Rs. 3,00,000 plus tax.

Step 1: Tax on the advance = Rs. 1,18,000 x 18/118 = Rs. 18,000, payable in May 2026.

Step 2 (invoice on 25 June 2026, within 30 days): time of supply for the balance is 25 June 2026. Balance tax = Rs. 54,000 minus Rs. 18,000 = Rs. 36,000, payable in June 2026.

Step 3 (invoice on 20 July 2026, after 30 days, balance paid on 5 August 2026): time of supply is the earlier of the date of provision (10 June 2026) and the date of payment, so the balance tax still belongs to June 2026.

10.3 Continuous supply of goods and services

Section 2(32) defines continuous supply of goods as goods supplied continuously or on a recurrent basis under a contract, through a wire, cable, pipeline or otherwise, with regular or periodic invoicing. Section 2(33) defines continuous supply of services as services supplied continuously or on a recurrent basis under a contract for more than three months with periodic payment obligations. For these, the invoice, and so the time of supply, is fixed as follows:

Type of continuous supply	Invoice to be issued
Goods with successive statements or payments (section 31(4))	Before or at the time each statement is issued or payment received
Services, due date ascertainable from contract (section 31(5)(a))	On or before the due date of payment
Services, due date not ascertainable (section 31(5)(b))	Before or at the time of receipt of payment
Services, payment linked to an event (section 31(5)(c))	On or before the date of completion of the event

Illustration 52: Facility management contract

Shree Facility Services has a 12-month contract from 1 April 2026 with a hospital in Vadodara. The fee is Rs. 3,00,000 per quarter plus 18% GST, payable by the 10th day after each quarter.

Step 1: For the first quarter the due date is 10 July 2026, so the invoice must be issued by 10 July 2026.

Step 2: Invoice on 8 July 2026, payment on 18 July 2026: time of supply is 8 July 2026. Tax of Rs. 54,000 (CGST Rs. 27,000 + SGST Rs. 27,000) belongs to July 2026.

10.4 Reverse charge supplies

Under reverse charge the recipient pays tax, so the law uses dates within the recipient's knowledge, with an outer limit tied to the supplier's invoice.

Supply	Time of supply
Goods (section 12(3))	Earliest of receipt of goods, payment, and the date immediately after 30 days from the supplier's invoice
Services (section 13(3))	Earlier of payment and the date immediately after 60 days from the supplier's invoice
Services from an associated enterprise outside India (proviso to section 13(3))	Earlier of entry in the recipient's books and payment
None of the above determinable	Date of entry in the recipient's books

Where the supplier is unregistered, the recipient issues a self-invoice, which rule 47A (from 1 November 2024) requires within 30 days of receipt of the supply. Reverse charge tax must be paid in cash; the credit can be taken in the same return.

Illustration 53: Reverse charge on legal services

Patel Engineering Pvt. Ltd. receives legal services from an individual advocate (reverse charge). The bill for Rs. 1,50,000 is dated 1 February 2026 and is paid on 15 April 2026.

Step 1: Sixty days from 1 February 2026 end on 2 April 2026 (February 2026 has 28 days); the date immediately after is 3 April 2026.

Step 2: Time of supply is the earlier of 3 April 2026 and 15 April 2026, that is 3 April 2026. Tax of Rs. 27,000 (CGST Rs. 13,500 + SGST Rs. 13,500) is paid in the April 2026 return.

Illustration 54: Import of services from an associated enterprise

Zenith India Pvt. Ltd. books a management fee of USD 50,000 from its US parent on 31 March 2026 and pays on 20 June 2026.

Time of supply is 31 March 2026, the earlier of book entry and payment. IGST under reverse charge goes into the March 2026 return. Year-end provisions for group charges therefore trigger tax even when payment waits for transfer pricing approval.

10.5 Vouchers after the Finance Act, 2025

Sections 12(4) and 13(4) originally made the date of issue of a voucher the time of supply where the underlying supply was identifiable, and the date of redemption in other cases. AARs took conflicting views on gift cards and meal vouchers. CBIC Circular 243/37/2024-GST dated 31 December 2024 clarified that vouchers are neither goods nor services; they are instruments accepted as consideration. Tax arises only on the underlying supply when the voucher is redeemed. Distribution on a principal-to-principal basis is not a supply; a commission earned as an agent is taxable; unredeemed vouchers are not consideration for any supply. The Finance Act, 2025 then omitted sections 12(4) and 13(4).

Illustration 55: Gift card

Deepak Electronics sells a gift card of Rs. 5,000 on 20 October 2026. It is redeemed on 12 November 2026 against a speaker priced at Rs. 5,000 including 18% GST.

No tax arises in October. In November, tax = Rs. 5,000 x 18/118 = Rs. 762.71 on value of Rs. 4,237.29. If the card had expired unused, no tax would arise at all.

10.6 Interest and late fee for delayed payment

Section 15(2)(d) includes interest, late fee or penalty for delayed payment in value. Sections 12(6) and 13(6) fix its time of supply as the date on which the supplier receives it, since such charges are often waived. It carries the rate of the main supply. For example, if Joshi Packaging (boxes at 18%) raises a debit note for interest of Rs. 15,000 in October 2026 and is paid on 12 November 2026, tax of Rs. 2,700 is payable in November 2026. Where no other rule works, sections 12(5) and 13(5) take the due date of the return, or the date of payment of tax.

10.7 Change in rate of tax (Section 14)

When a rate changes, three events may fall on different sides of the date of change: the supply itself, the invoice and the payment. Section 14 decides the rate. The easy rule is "two out of three": if two events fall before the change, the old rate applies; if two fall after, the new rate applies.

Supply	Invoice	Payment	Time of supply	Rate
Before	After	After	Earlier of invoice and payment (14(a)(i))	New
Before	Before	After	Date of invoice (14(a)(ii))	Old
Before	After	Before	Date of payment (14(a)(iii))	Old
After	Before	After	Date of payment (14(b)(i))	New
After	Before	Before	Earlier of invoice and payment (14(b)(ii))	Old
After	After	Before	Date of invoice (14(b)(iii))	New

Under the Explanation to section 14, the date of receipt of payment is the date of credit in the bank account if the credit comes after four working days from the date of change. The GST 2.0 changes of 22 September 2025 (a Monday) show how this works: beauty and wellness services moved from 18% to 5% without ITC, and cement from 28% to 18%.

Illustration 56: Salon services across the rate change

Glow Unisex Salon, Jaipur, sells bridal packages of Rs. 20,000 each (before tax).

Package 1: services on 18 to 20 September 2025, invoice on 23 September, payment on 25 September. Two events after: 5%, tax Rs. 1,000 (CGST Rs. 500 + SGST Rs. 500).

Package 2: services and invoice on 19 September 2025, payment on 24 September. Two events before: 18%, tax Rs. 3,600.

Package 3: full advance and invoice on 15 September 2025, services on 27 September. Two events before: 18%, tax Rs. 3,600, already paid in September.

Illustration 57: Cement dealer and the four working day rule

Patel Cement Agency, Rajkot, sells 500 bags at Rs. 400 (value Rs. 2,00,000) in each case.

Case A: invoice on 19 September 2025, delivery on 23 September, payment on 24 September. Invoice before; supply and payment after. Time of supply is the date of payment: 18%, tax Rs. 36,000.

Case B: delivery and invoice on 19 September 2025, payment on 26 September. Time of supply is the invoice date: 28%, tax Rs. 56,000.

Case C: invoice on 19 September 2025, delivery on 23 September; a cheque received and booked on 20 September is credited to the bank on 29 September. The four working days after 22 September end on 26 September, so the payment date is 29 September. Two events after: 18%, tax Rs. 36,000.

Practice note

Around any rate change, keep a cut-off schedule of dispatch or completion dates, invoice dates, and payment dates (book entry and bank credit) for every open order. Section 14 fixes the rate only; the tax period still follows sections 12 and 13. Where a service moves to a rate without ITC, stop taking credit on inputs used for supplies made at the new rate.

Chapter summary

• Time of supply decides the tax period, the rate on a rate change, the exchange rate and interest exposure.

• Goods: earlier of invoice (or the last date for it) and payment, but advances for goods are not taxed for normal taxpayers since 15 November 2017.

• Services: invoice within 30 days (45 days for banks, insurers and NBFCs); advances are taxed on receipt; excess up to Rs. 1,000 may go with the next invoice.

• Continuous supplies follow section 31(4) and 31(5): due date, payment or completion of the linked event.

• Reverse charge: 30 days (goods) or 60 days (services) after the supplier's invoice is the outer limit; for foreign associated enterprises, the earlier of book entry and payment.

• Vouchers are neither goods nor services; sections 12(4) and 13(4) are omitted, and tax arises on redemption. Interest for delayed payment is taxed when received.

• On a rate change, two of three events decide the rate; a bank credit more than four working days after the change fixes the payment date.