The Central Goods and Services Tax Act, 2017
CHAPTER IV: TIME AND VALUE OF SUPPLY
Section 12: Time Of Supply Of Goods
Bare Act
(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 sub-section (1) of 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.
Simplified Act
Simplified Explanation of The Central Goods and Services Tax Act, 2017 - Section 12
When to Pay Tax on Goods:
(1) You need to pay tax on goods when they are supplied. This is decided by the rules in this section.
Deciding the Time of Supply:
(2) The time you should consider the goods supplied is either:
-
(a) When the invoice is issued or when it should have been issued, whichever comes first; or
-
(b) When payment is received for the goods.
If the seller gets up to ₹1000 more than the invoice amount, they can choose to consider the supply time for this extra amount as the invoice date.
Clarifications:
- Supply is considered made when it's invoiced or paid for.
- The date payment is received is when it's recorded in the seller's books or bank account, whiche… Read the complete text with KanoonGPT Pro.
Explanation using examples
Imagine a scenario where Mr. A runs an electronics store and sells a television to Mr. B on April 10, 2023. Mr. A issues the invoice on the same day. According to the provisions of the Central Goods and Services Tax Act, 2017, Section 12, the liability to pay GST on the television arises at the time of supply.
Under Section 12(2), the time of supply would be the earlier of the date of issue of the invoice (April 10, 2023) or the date on which Mr. A receives the payment. If Mr. B pays for the television on April 9, 2023, before the invoice is issued, the time of supply for GST purposes would be April 9, 2023.
However, if Mr. B pays an advance of INR 500 on April 9, 2023, and the remaining amount on April 10, 2023, when the invoice is issued, the time of supply for the advance amount would be April 9, 2023, and for the remainder of the payment, it would be April 10, 2023.
If instead, Mr. A was selling the television under reverse charge basis to Mr. B, and Mr. B receives the goods on April 12, 2023, but pays on April 10, 2023, then as per Section 12(3), the time of supply would be the earlier date, which is April 10, 2023.
