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Time of Supply of Services – Forward Charge - GST Ready Reckoner - GSTExtract Time of Supply of Services Forward Charge Time of Supply Section 13 of CGST Act 2017 provides the ways for the determination of the time of supply in the Supply of service under forward charge. We consider below how the time of supply is determined in each of these situations. But before started analysis of section 13 of CGST Act 2017, we should read section 31 of CGST act 2017. Time limit for issuance of invoice for supply of services under section 31(2) of CGST Act 2017 read with Rule 47 of CGST Rules ] The criteria to determine the time of supply of services depend upon whether the invoice is issued within the time prescribed under section 31. In case of taxable supplies of services The invoice shall be issued within a period of 30 days from the date of the supply of service: Where the supplier of services is insurance companies/ banking companies/ financial institutions including NBFCs the period within which tax invoice need to be issue within 45 days from the date of supply of service. [first proviso rule 47 of CGST Rules ]. In case of insurance companies / banking companies / financial institutions including NBFCs / telecom companies / notified supplier of services making taxable supplies between distinct persons as specified in section 25, invoice may be issued before or at the time of recording such supply in the books of account or before the expiry of the quarter during which the supply was made [ Second proviso to rule 47 ] . In case of continuous supply of services , the invoice should be issued either (i) on/ before the due date of payment; or (if the due date of payment is know ) (ii) before/ at the time when the supplier of service receives the payment, if the due date of payment is not known ; or (iii) on/ before the date of completion of the milestone event when the payment is linked to completion of an event [Section 31(5) of CGST Act 2017]. Continuous supply of services are provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding 3 months with periodic payment obligations and includes supply of such services as the Government may notify. In case of cessation of supply of services before completion of supply, the invoice (to the extent of the supply made before such cessation) should be issued at the time when the supply ceases [Section 31(6) of CGST Act 2017]. Time of supply of services subject to forward charge (also apply to who opt composition scheme section 10 of CGST Act 2017) Section 13(2) of CGST Act 2017 a) If invoice issued within time under section 31 of CGST Act 2017, Earliest of the following date Date of issues of invoice or Date of receipt of payment, to the extent the payment covers the supply of services, (whichever is earlier) Date of entry in the books of accounts, or Credit date in the bank account b) If invoice not issued within time under section 31 of CGST Act 2017, Earliest of the following date The date of provision of service or Date of receipt of payment, to the extent the payment covers the supply of services, (whichever is earlier) Date of entry in the books of accounts, or Credit date in the bank account c) In a case aforesaid above two provisions do not apply , then Date on which recipient shows the receipt of service in his books of account, Significance of to the extent the payment covers the services Suppose a part of the consideration is paid in advance or invoice is issued for part payment, the time of supply will not cover the full supply. The supply shall be deemed to have been made to the extent it is covered by the invoice or the part payment. Examples Example 1:- ABC ltd. Enters into contract with XYZ on 2 nd July for 2-year construction of new building to used for commercial purpose for total consideration of ₹150 lakh. As per contract ABC ltd. Is required to make payment at different stage of completion of the building namely 50 %, 75%, and 100%. Determine the time of supply using relevant details given as under: - Stage Date of various stages Date of issuance of invoice Date of payment Amount Initial booking 02.07.2021 02.072021 02.07.2021 ₹ 15 Lakh 50% completion of building 15.03.2022 22.03.2022 29.03.2022 ₹ 60 Lakh 75% completion of building 20.06.2022 24.07.2022 23.07.2022 ₹ 35 Lakh 100% completion of building 30.09.2022 30.09.2022 20.09.2022 ₹ 40 Lakh As per sec 13(2), the time of supply of services, is earlier of the following dates: - a) If invoice issued within time under section 31(5) , Earliest of the following dates Date of issues of invoice or Date of receipt of payment, to the extent the payment covers the supply of services b) If invoice not issued within time under section 31(5) , Earliest of the following dates The date of provision of service or Date of receipt of payment, to the extent the payment covers the supply of services. The present case, the construction services are provided under contract for a period of more than 3 months with periodic payment obligation, such services would fall within the ambit of continuous supply of services Accordingly, the time of supply with respect to each of the stage of completion is as following: - Stages of completion Time of supply Initial booking Invoice is issued within the prescribed time limit under section 31, earlier of the date date of invoice (02.072021), or date of receipt of payment (02.07.02021) Therefore, time of supply is 02.07.2021. 50% completion of building Invoice has not been issued within prescribed time limit under section 31, earlier of the dates date of provision of services 15.03.2022 or date of receipt of payment 29.03.2022, Therefore, time of Supply would be 15.03.2022. 75% completion of building Invoice has not been issued within the prescribed time limit under section 31, earlier of the dates date of provision of services 20.06.2022 or date of receipt of payment 23.07.2022 Therefore, time of supply would be 20.06.2022. 100% completion of building Invoice is issued within the prescribed time limit under section 31, earlier of the dates date of issue of invoice 30.09.2022 or date of receipt of payment 20.09.2022, Therefore, time of supply would be 20.09.2022. Example 2 :- Determine the time of supply from the following particulars 6 th May Booking of convention hall, sum agreed ₹ 15,000/-, advance of ₹3,000 received 15 th September Function held in convention hall 27 th October Invoice issued for ₹ 15,000/-, indicating balance of ₹12,000 payable 3 rd November Balance payment of ₹ 12,000/- received As per Section 31(2) read with rule 47, of CGST Rules, the tax invoice is to be issued within 30 days of supply of services. In the given case, where the invoice is not issued within the prescribed time as per section 31 of CGST Act 2017, time of supply of services, earliest of following dates Date of provision of services or Date of receipt of payment, Time of supply In case or advance receipt Therefore, the time of supply of services to the extent of ₹. 3,000/- is Date of provision of services 15 th September Date of receipt of payment 6 th May 6 th May as the date of payment of ₹3,000/- is earlier than the date of provision of services. The time of supply of services to the extent of the balance ₹12,000/- is the 15 th September, which the date of provision of services Therefore, the time of supply of services to the extent of ₹ 3,000/- is Date of provision of services 15 th September Date of receipt of payment 3 rd November 15 th September is the time of supply for the extent of the balance of ₹ 12,000/-. Example 3 : - Instigation Shows that ABC Co. carried out services of cleaning and repairs of thanks in an apartment complex, for which apartment owners association showed a payment in cash on 4 th April to them against works of the description the dates of the work are not clear from the records of ABC Co. ABC Co. have not issued or entered the payment in their books of account. The time of supply cannot be determined vide the provision of clauses (a) and (b) of Section 13(3) of CGST Act 2017 as neither the invoice has been issued nor the date of provision of services is available as also the date of receipt of payment in the books of the supplier is also not available. Therefore, the time of supply will be determined vide clause (c) of section 13(2) the date on which the receipt of services shows receipt of the services in his books of account.
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