Time of Supply for change in GST Rate on Supply Of Goods/Services [Section 14 of CGST Act, 2017]

Home   /   Time of Supply for change in GST Rate on Supply Of Goods/Services [Section 14 of CGST Act, 2017]

(I) In case of supply of ‘Services’

Notwithstanding anything contained in section 12 or section 13, the time of supply, where there is a change in the Rate of GST in respect of services, shall be determined in the following manner, namely:—

(A) Where the Services have been supplied before the change in effective rate of GST

(i) where the invoice for the same has been issued and the payment is also received after the change in rate of tax, the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; or

(ii) where the invoice has been issued prior to the change in rate of tax but payment is received after the change in rate of tax, the time of supply shall be the date of issue of invoice: or

(iii) where the payment has been received before the change in rate of tax, but the invoice for the same is issued after the change in rate of tax, the time of supply shall be the date of receipt of payment.

(B) Where the Services have been supplied after the change in Rate of GST

In case the services have been supplied after the change in rate of tax,—

(i) where the payment is received after the change in rate of tax but the invoice has been issued prior to the change in rate of tax, the time of supply shall be the date of receipt of payment; or

(ii) where the invoice has been issued and payment is received before the change in rate of tax, the time of supply shall be the date of receipt of payment or date of issue of invoice, whichever is earlier or

(iii) where the invoice has been issued after the change in rate of tax but the payment is received before the change in rate of tax, the time of supply shall be the date of issue of invoice.

“The date of receipt of Payment “: “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. Further, the date of Receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after four working days from the date of change in the rate of tax.

 The above provisions may be summarized as under  :

Case -1 : Where a Taxable Supply of Services has been provided before the change in effective rate of GST

 Situation Time of supply Rate of service
1.Invoice issued after change in rate Payment received after change in rateDate of payment or the date on which the
invoice has been issued, whichever is earlier
New rate
2.Invoice issued prior to change in rate Payment received after the change in rateDate on which invoice has been issued.Old rate
3.Payment received before the change in rate Invoice issued after the change in rateDate when the payment has been receivedOld rate

Case 2: Where a taxable supply of services is provided after the change in effective rate of GST

 Situation Time of supply Rate of service
tax
1.Payment received after the change in rate Invoice issued prior to the change in rateDate of payment, even though the payment is subsequent to date of invoiceNew rate
2.Invoice issued before change in rate Payment received before the change in rateDate when invoice was issued or the payment was received, whichever is earlierOld rate
3.Invoice issued after change in rate Payment received before the change in rateDate on which invoice is issued even though the payment is received before the date of invoiceNew rate

Important notes :

(1) For determination of Rate of GST

If any two of the following three events take place before the change in the effective rate of tax, the old rate of GST shall apply:

(a) supply of service

(b) issue of invoice

(c) receipt of payment

On the other hand, if any two of the above three events take place after the change in the effective rate of tax, the ne rate of GST shall apply

(2) For determination of time of supply

(a) If two out of the above three events (including the first event of supply of service) take place before the change of effective rate of GST, the second event shall be taken as the time of supply.

(b)If two out of the above three events (including the first event of supply of service) take place after the change of effective rate of GST. the second event shall be taken as the time of supply

(c) In any other case, the time of supply shall be issue of invoice or receipt of payment whichever is earlier.

Example :

GST Rate—    up to 31.8.2019        — 12%
GST Rate—    from 19.2019            — 18%

SituationsService ProvidedInvoice RaisedPayment
Received
Time of supplyRate
128.8.20193.9.201910.9.20193.9.201918%
228.8.201930.8.201910.9.201930.8.201912%
328.8.201931.8.201930.8.201930.8.201912%
43.9.201928.8.20195.9.20195.9.201918%
53.9.201928.8.201930.8.201928.8.201912%
63.9.20195.9.201928.8.20195.9.201918%

Notes.—
1.         In situation 1 above, only one event has taken place before 1.9.2019 i.e. taxable service provided.

Hence, new rate shall be applicable and the time of supply shall be date of invoice or date of payment whichever is earlier.

2.         In situation 2 above, the following two events have taken place before 1.9.2019:

(I) Date of service provided

and

(ii) Date of invoice.

Hence, old rate shall be applicable and the time of supply shall be date on which invoice has been issued.

3.         In situation 3, all the events have taken place before 1.9.20 18.

Hence, old rate shall be applicable and the time of supply shall be date of invoice or date of payment whichever is earlier.

4.         In situation 4, only one event has taken place before 1.9.2019 i.e. the date of invoice.

Hence, new rate shall be applicable and the time of supply shall be date of payment. even though the payment is subsequent to date of invoice.

5.         In situation 5, the following two events have taken place before 1.9.2019:

(i) Date of invoice raised

and

(ii) Date of payment

Hence, old rate shall be applicable and the time of supply shall be date ‘when invoice was issued or the payment was received, whichever is earlier.

6. In situation 6 only one event has taken place before 1.9.20 18 i.e. the date of payment. Hence, new rate shall be applicable and the time of supply shall be date on which invoice is issued even though the payment is received before the date of invoice.

(II) In case of Supply of ‘Goods’

Although the above provisions of section 14 were also applicable for supply of goods, but in view of Notification no. 66/2017..CT, in which the date of advance payment of goods is not relevant for determining the time of supply, and as such where there is a change in rate of tax in respect of supply of goods, the time of supply shall be determined as per section 12(2)(a) (i.e. on the date of issue of invoice by the supplier or the last date of on which he is required under section 31(1) with respect of the supply of goods and not at the time of receipt of advance of such supplies)

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