Time of Supply of Goods answers one critical question: when exactly does your GST liability begin? The government wants to know the precise date from which you owe tax — and Section 12 gives the answer depending on who is paying the tax.
Forward Charge (Normal Case — Supplier pays GST): The time of supply is the earlier of two dates — (a) the date of invoice (or the last date by which the invoice should have been issued under Section 31), or (b) the date the supplier receives payment. Whichever comes first, that's your tax point. A small but exam-favourite twist: if the supplier receives up to ₹1,000 more than the invoice amount, they can optionally treat that excess as taxable on the date of the invoice for that excess — this avoids hassle for minor rounding differences. Also remember: 'date of payment' means the date it's entered in the supplier's books or credited to the bank account — whichever is earlier.
Reverse Charge (RCM — Recipient pays GST): Here the recipient is liable, so the law uses the recipient's perspective. Time of supply is the earliest of — (a) date of receipt of goods, (b) date of payment (as per books or bank debit, whichever earlier), or (c) the 31st day from the date of the supplier's invoice. If none of these can be determined, fall back to the date of entry in the recipient's books. This 'earliest of three' rule for RCM is a very common 4-mark exam question — don't mix it up with the forward charge 'earlier of two' rule.
Vouchers: If the supply linked to the voucher is identifiable when the voucher is issued → tax point is the date of issue. If not identifiable (like a general gift card) → tax point is the date of redemption. And for interest or late fees received for delayed payment? The time of supply is simply the date the supplier receives that extra amount.
📊 Worked example
Example 1 — Forward Charge
Rajesh & Co. Pvt. Ltd. supplies machinery to a buyer. The invoice is dated 5 April 2025. The buyer pays 50% advance on 28 March 2025 and the balance on 10 April 2025.
Working:
- For the advance of 50%: Date of payment = 28 March 2025; Invoice date = 5 April 2025 → Earlier = 28 March 2025 → Time of supply for 50% = 28 March 2025
- For the balance 50%: Date of payment = 10 April 2025; Invoice date = 5 April 2025 → Earlier = 5 April 2025 → Time of supply for remaining 50% = 5 April 2025
Note: Section 12 applies to the extent covered by invoice or payment (Explanation 1), so we split the supply.
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Example 2 — Reverse Charge (RCM)
Ms. Iyer (registered dealer) purchases goods from an unregistered supplier, Mr. Sharma. Details:
- Invoice issued by Mr. Sharma: 1 June 2025 (→ 31st day = 1 July 2025)
- Goods received by Ms. Iyer: 10 June 2025
- Payment made by Ms. Iyer, entered in her books: 15 June 2025 (bank debit on 16 June 2025 → books earlier)
Working:
- (a) Date of receipt of goods = 10 June 2025
- (b) Date of payment (books) = 15 June 2025
- (c) 31st day from invoice = 1 July 2025
Earliest of the three = 10 June 2025
Answer: Time of supply = 10 June 2025
⚠️ Common exam mistakes
- Mixing up 'earlier of two' vs 'earliest of three': For forward charge it's the earlier of two (invoice or payment). For RCM it's the earliest of three (receipt, payment, 31st day). Students often apply the same rule to both — don't.
- Getting the '31st day' rule wrong for RCM: The 31st day is counted from the supplier's invoice date, not from the date goods are received. Missing this by one day can flip the entire answer.
- Ignoring the ₹1,000 excess proviso: If the exam gives a scenario where the buyer pays ₹1,050 against an invoice of ₹50,000, students ignore the excess. Remember: up to ₹1,000 excess can optionally be clubbed with the invoice date — this is a frequent MCQ trap.
- Wrong 'date of payment' for RCM: For RCM, 'date of payment' is the earlier of books-of-account entry or bank debit in the recipient's books. Students sometimes use the credit date or the supplier's books — both are wrong for RCM.
- Voucher rule mix-up: Students default to 'date of issue' for all vouchers. Correct rule: date of issue only if supply is identifiable; otherwise, it's the date of redemption.
📖 Bare Act text — Section 12, CGST Act 2017
(click to expand)
(1) The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section.
(2) The time of supply of goods shall be the earlier of the following dates, namely:—
(a) the date of issue of invoice by the supplier or the last date on which he is required, under section 31, to issue the invoice with respect to the supply; or
(b) the date on which the supplier receives the payment with respect to the supply:
Provided that where the supplier of taxable goods receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice in respect of such excess amount.
Explanation 1.––For the purposes of clauses (a) and (b), ―supply‖ shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment.
Explanation 2.––For the purposes of clause (b), ―the date on which the supplier receives the payment‖ shall be the date on which the payment is entered in his books of account or the date on which the payment is credited to his bank account, whichever is earlier.
(3) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earliest of the following dates, namely:—
(a) the date of the receipt of goods; or
(b) the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or
(c) the date immediately following thirty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the time of supply shall be the date of entry in the books of account of the recipient of supply.
(4) In case of supply of vouchers by a supplier, the time of supply shall be—
(a) the date of issue of voucher, if the supply is identifiable at that point; or
(b) the date of redemption of voucher, in all other cases.
(5) Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4), the time of supply shall––
(a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or
(b) in any other case, be the date on which the tax is paid.
(6) The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value.
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