Think of Time of Supply as the trigger point — the moment GST becomes due. Section 13 answers: when exactly does the government expect you to pay GST on services? Get this wrong and you could pay tax in the wrong month, attracting interest and penalties.
For forward charge (supplier pays tax — the normal case), pick the earliest of three dates: (a) if the invoice is raised on time (within 30 days of service), compare the invoice date vs payment receipt date — whichever is earlier is your time of supply; (b) if the invoice is raised late, compare the date of service provision vs payment receipt date — again, earlier wins; (c) if neither (a) nor (b) applies, look at when the recipient books the receipt in their accounts. One handy rule: 'payment received' means whichever is earlier — the date it hits the supplier's books OR the date it's credited to their bank account. Also note the ₹1,000 tolerance — if a customer pays up to ₹1,000 more than the invoiced amount, the supplier can optionally treat that excess as belonging to the next invoice's time of supply. This is a small practical relief for rounding differences.
For reverse charge (recipient pays tax — e.g., legal services from an advocate), the time of supply is the earlier of: (a) date of payment debited in recipient's bank or entered in their books, or (b) 61st day from the date of supplier's invoice. If neither is determinable, fall back to the date the recipient books the entry. Special case: if the supplier is an associated enterprise located outside India (think: parent company abroad), time of supply is payment date or books entry date — whichever is earlier, with no 60-day rule. For vouchers, if the supply is identifiable at issue → use issue date; otherwise → use redemption date. Finally, interest, late fees, or penalties for delayed payment — their time of supply is when the supplier actually receives that extra amount. This is frequently tested as a 4-mark or 5-mark question in CA Inter exams.
📊 Worked example
Example 1 — Forward Charge (Invoice issued on time)
Rajesh & Co. Pvt. Ltd. provides consultancy services to Ms. Iyer. Service completed on 10 April 2025. Invoice raised on 25 April 2025 (within 30 days — so invoice is on time). Ms. Iyer pays on 20 May 2025.
| Event | Date |
|---|---|
| Service provided | 10 Apr 2025 |
| Invoice issued | 25 Apr 2025 |
| Payment received | 20 May 2025 |
Since invoice is on time → use clause (a): compare invoice date vs payment date.
- Invoice date: 25 Apr 2025
- Payment date: 20 May 2025
- Earlier = 25 April 2025
Time of Supply = 25 April 2025 → GST due in April 2025 return.
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Example 2 — Reverse Charge (Advocate services to Mr. Sharma)
Mr. Sharma's firm (registered under GST) hires an advocate. Advocate raises invoice on 1 March 2025. Mr. Sharma pays on 15 June 2025 (payment debited in bank on same date).
| Event | Date |
|---|---|
| Advocate's invoice | 1 Mar 2025 |
| 60 days from invoice | 30 Apr 2025 |
| Time of supply under (b) | 1 May 2025 (day immediately following 60 days) |
| Actual payment | 15 Jun 2025 |
Compare: (a) Payment date = 15 Jun 2025 vs (b) 61st day = 1 May 2025
Earlier = 1 May 2025
Time of Supply = 1 May 2025 → Mr. Sharma must pay GST under reverse charge in May 2025 return, even though he hasn't paid the advocate yet.
⚠️ Common exam mistakes
- Students apply Section 12 (goods) rules to services — Section 13 exclusively governs services. Section 12 is for goods. Don't mix them up in the exam.
- Forgetting the 'on time' invoice check — Many students directly jump to comparing invoice date vs payment date without first checking whether the invoice was issued within 30 days. If the invoice is late, the comparison shifts to service provision date vs payment date.
- Getting the 60-day rule wrong for reverse charge — It's the date immediately following 60 days (i.e., day 61), not day 60 itself. A small detail examiners love to test.
- Ignoring the associated enterprise exception — For overseas associated enterprises (e.g., a foreign holding company providing services), the 60-day rule does NOT apply. Time of supply is payment or books entry, whichever is earlier. Students often apply the standard reverse charge rule here.
- Confusing 'date of payment' definition — 'Date of receipt of payment' is the earlier of: date entered in supplier's books OR date credited to bank account. Don't assume it's always the bank credit date.
📖 Bare Act text — Section 13, CGST Act 2017
(click to expand)
(1) The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of this section.
(2) The time of supply of services shall be the earliest of the following dates, namely:—
(a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under section 31 or the date of receipt of payment, whichever is earlier; or
(b) the date of provision of service, if the invoice is not issued within the period prescribed under section 31 or the date of receipt of payment, whichever is earlier; or
(c) the 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:
Provided that where the supplier of taxable service 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 relating to such excess amount.
Explanation.––For the purposes of clauses (a) and (b)––
(i) the 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;
(ii) ―the date of receipt of payment‖ shall be the date on which the payment is entered in the books of account of the supplier 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 earlier of the following dates, namely:––
(a) 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
(b) the date immediately following sixty 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), the time of supply shall be the date of entry in the books of account of the recipient of supply:
Provided further that in case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment, whichever is earlier.
(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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