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Microlesson · 5-min read

Time of Supply for Services - Section 13 (FCM & RCM)

# Time of Supply for Services [Section 13]

Unlike goods, GST on advance for services IS levied. So the date of receipt of payment becomes a live trigger.

## Forward Charge Mechanism (FCM) – Two-Step Test

Step 1: Was invoice issued within time? (within 30 days of provision of service; 45 days for banking/NBFC/insurance)

If invoice issued on timeIf invoice NOT issued on time
ToS = Earlier of: Date of invoice OR Date of receipt of paymentToS = Earlier of: Date of provision of service OR Date of receipt of payment

The penalty for late invoice = supplier loses the comfort of the invoice date trigger and falls back on provision of service date (typically earlier → earlier tax payable).

## Reverse Charge Mechanism (RCM)

ToS = Earliest of:

1. Date of making payment, OR

2. 61st day from date of invoice issued by supplier (if supplier is liable to issue invoice), OR

3. Date of invoice issued by recipient (if recipient is liable — i.e., supplier is unregistered).

If none determinable → Date of entry in recipient's books.

## Special Case: Import of Service from Associated Enterprise (located outside India)

Where supply is between associated enterprises (Section 92A of Income-tax Act) and supplier is outside India:

ToS = Earlier of:

  • Date of making payment, OR
  • Date of entry in recipient's books of accounts.

Worked example

### Example 1

Ex 1 – Invoice on time vs late (FCM)

A Ltd. provided service on 5 Jun; payment credited on 15 Jun.

(a) Invoice issued 25 Jun (within 30 days — on time):

ToS = Earlier of [Invoice 25 Jun / Payment 15 Jun] = 15 Jun.

(b) Invoice issued 15 Jul (after 30 days — late):

ToS = Earlier of [Provision 5 Jun / Payment 15 Jun] = 5 Jun.

### Example 2

Ex 2 – RCM, Supplier Registered vs Unregistered

B Ltd. provided RCM service to Shyam on 5 Jun. Invoice 25 Jun. Shyam's bank debited 15 Jul; entered in books 18 Jul.

→ Date of making payment = Earlier of (15 Jul / 18 Jul) = 15 Jul.

(a) Supplier registered (B Ltd. issues invoice):

ToS = Earlier of [Payment 15 Jul / 61st day from 25 Jun = 25 Aug] = 15 Jul.

(b) Supplier unregistered, Shyam self-invoices on 20 Jun:

ToS = Earlier of [Payment 15 Jul / Self-invoice 20 Jun] = 20 Jun.

### Example 3

Ex 3 – Continuous Supply, Milestone Linked

A Ltd. provides 2-year construction. ₹50 lakhs due on 25% milestone, completed 15 Jul; payment received 1 Aug; invoice issued 25 Jul.

→ For milestone-linked continuous supply, invoice must be issued on or before milestone completion (15 Jul).

→ Invoice on 25 Jul is late.

→ ToS = Earlier of [Provision 15 Jul / Payment 1 Aug] = 15 Jul.

⚠️ Common exam mistakes

  • Forgetting to FIRST check whether invoice was issued within the prescribed time — the test branches into two completely different rules based on that.
  • Using '31st day' (goods RCM) instead of '61st day' (services RCM) from date of invoice.
  • In RCM, mixing up who issues the invoice — if supplier is unregistered, the recipient self-invoices and that date is used.
  • For associated enterprise from outside India, applying normal RCM rules instead of the special two-test rule.
Bare-Act text Section 13 · CGST Act, 2017 · click to expand
The time of supply of services shall be the earliest of (a) date of issue of invoice, if invoice is issued within the prescribed period u/s 31, or date of receipt of payment, whichever is earlier; or (b) date of provision of service, if invoice is not issued within the prescribed period, or date of receipt of payment, whichever is earlier.
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