Section 13 of CGST Act, 2017 : Section 13: Time Of Supply Of Services

Explanation using Example

Imagine a scenario where a freelance graphic designer, named Aarav, provides design services to a company, XYZ Ltd. On March 10th, Aarav completes the project and sends an invoice to XYZ Ltd. for INR 50,000, which is due within 30 days. According to the Central Goods and Services Tax Act, 2017, Section 13:

1. If XYZ Ltd. pays the invoice on March 15th, the time of supply for the service provided by Aarav would be March 15th, since the payment date is earlier than the invoice due date.
2. If XYZ Ltd. records the service in their books of account on March 12th and has not yet paid, then the time of supply would be March 12th, as it is the date the recipient shows receipt of services.
3. If Aarav does not receive payment within the prescribed period and XYZ Ltd. has not recorded the transaction in their books, the time of supply would default to the date of service provision, which is March 10th.
4. In case Aarav receives a partial payment of INR 1,000 in excess of the invoiced amount on April 5th, he can opt to consider the time of supply for this excess amount as the date he issues an invoice for the additional amount.

These provisions ensure that the tax liability is determined and met at the appropriate time, reflecting the actual flow of services and payments.