Section 13 provides for the determination of time of supply of services in the following situations:

Supply of services under forward charge

Supply of services under reverse charge;

Supply of vouchers that can be used to pay for services;

Residual cases

Addition to value of supply of services by way of interest or late fee or penalty for delayed payment

Provisions of time of supply under CGST Act have also been made applicable to IGST Act vide section 20 of the IGST Act.

Section 13(1)

The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of this section.

As per section 13(1), GST becomes payable on services at the time of its supply.

Provisions of time of supply under CGST Act have also been made applicable to IGST Act vide section 20 of the IGST Act.

Section 13(2)

The time of supply of services shall be as follows

(a) If invoice is issued within period prescribed u/s 31, TOS shall be earlier of

date of issue of invoice or

date of receipt of payment

(b) If invoice is not issued within period prescribed u/s 31, TOS shall be earlier of

date of supply of service, or

date of receipt of payment, or

(c) where the clause (a) or clause (b) do not apply, then TOS shall be

date of receipts of services by recipient in his books of account

For knowing last date by which invoice is required to be issued, please refer guide on section 31

Question & Answer

Explanation 2 to Section 13(2)

“the date on which the supplier receives the payment”

shall be earlier of

date on which the payment is entered in his books of account or

date on which the payment is credited to his bank account.

Proviso to Section 13(2)

If supplier receives an amount up to Rs.1,000 in excess of the amount indicated in the tax invoice,

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.

Above provisions are same for goods and services

Ex

A telephone company receives Rs.5000 against an invoice of Rs.4800. The excess amount of Rs.200 can be adjusted against the next invoice.

The company has the option to take the date of the next invoice as the time of supply of service in relation to the amount of Rs.200 received in excess against the earlier invoice.

Explanation 1 to Section 13(2)

For clauses (a) and (b), “supply” shall be deemed to have been made to the extent it is covered by the invoice or the payment.

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 is deemed to have been made to the extent it is covered by the invoice or the part advance payment.

Above provisions are same for goods and services

Section 13(3)

In case of supplies taxable on RCM basis,

the time of supply shall be the earlier of following dates:––

(a) date of payment as entered in the books of account of the recipient or

debit date of payment in his bank account; or

(b) date immediately following 60 days from date of invoice or any other document

1^st Proviso - If Time of Supply depends on factors other than above mentioned factors

where it is not possible to determine the time of supply under clause (a) or (b),

time of supply shall be the date of entry in the books of account of the recipient of supply:

Above provisions are same for goods and service except date of receipts of goods and 30 days are replaced with 60 days.

Question & Answer

2^nd Proviso to Section 13(3)

in case of supply by associated enterprises, where the supplier of service is located outside India,

time of supply shall be earlier of

date of entry in the books of account of the recipient of supply or

date of payment, whichever is earlier.

Question & Answer

Vouchers are instruments that can be exchanged as payment for goods or services of the designated value. As per the definition, they are instruments, that certain persons (potential suppliers) are obliged to accept as consideration, part or full, for goods and/or services.  The instrument or its related documentation sets out the terms and conditions of use, the and/or services covered, and the identity of the potential suppliers of such goods and/or services.

Section 13(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.

The provisions relating to time of supply of vouchers that are exchangeable for goods or services are same.

Ex

A Ltd., a company providing hospitality services, enters into agreement with B Ltd. by which B Ltd. markets A Ltd.’s hotel rooms and sells coupons / vouchers redeemable for a discount against stay in the hotel.

As the supply against which the voucher will be redeemed is identifiable, the time of supply of the voucher will be its date of issue

Ex

With each purchase of a large pizza during the Christmas week from Perfect Pizza, one can buy a voucher for Rs.20 which will be redeemable till 5th Jan for a small pizza. As the supply against which the voucher will be redeemed is known on the date of issue of the vouchers, the time of supply is the date of issue of the voucher.

Section 13(5)

Where it is not possible to determine the time of supply u/ss (2) or (3) or (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.

Provisions relating to time of supply for residual category are same are same for goods and services.

Section 13(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.

Provisions relating to time of supply for addition in value by way of interest, late fee/penalty for delayed payment of consideration are same for goods and services.

A Ltd. sold goods to B Ltd. on 6th June with a condition that interest @ 2% per month will be charged if B Ltd. failed to make payment within 15 days of the delivery of the goods. Goods were delivered as also the invoice was issued on 6th June. B Ltd. paid the consideration for the goods on 6 th July along with applicable interest.

Time of supply for the goods sold is the date of issue of invoice, i.e. 6 th June and the

time of supply for addition in value by way of interest is the date when such addition in value is received by A Ltd., i.e. 6th July.

Question & Answer