Section 12 of CGST Act 2017: Time of Supply of Goods

Provisions under Section 12 of the Central Goods and Services Tax (CGST) Act, 2017 relating to “Time of Supply of Goods”, are as under:

Section 12 of CGST Act 2017: Time of Supply of Goods (CHAPTER IV TIME AND VALUE OF SUPPLY)

(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 [Refer Note 1]

(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.

Amendments History:

1. The words “sub-section (1) of” appearing in clause (a) of Sub-section (2) omitted, vide Section 6 of the CGST (Amendment) Act, 2018 (GOI Notification dated 29/08/2018), followed with Notification 2/2019 on commencement date of 01/02/2019.

Commentary on Section 12 of the CGST Act

This Section lays down the provisions for determining the time of supply for goods under the GST regime in India, which is crucial for identifying the point in time when the tax liability for the supply of goods arises, which subsequently impacts the due dates for tax payments and filing of returns.

i) Section 12(1) states that the provisions of this section shall apply to determine the time of supply of goods, as referred to in section 9 (levy and collection of tax) of the CGST Act.

ii) Section 12(2) deals with the general rule for determining the time of supply for goods. It states that the time of supply shall be the earlier of the following dates:

a) The date of issue of invoice or the last day by which the invoice is required to be issued under section 31 (tax invoice); or

b) The date on which the supplier receives the payment concerning the supply.

iii) Section 12(3) provides for a specific situation where the time of supply is determined when there is a change in the tax rate. In such cases, the time of supply will be the earlier of:

a) The date of the change in tax rate; or

b) The date of issue of invoice or the last day by which the invoice is required to be issued under section 31 (tax invoice).

iv) Section 12(4) deals with situations where the goods are supplied on the approval basis, like sale or return or other similar terms. The time of supply shall be the earlier of:

a) Six months from the date of removal of the goods; or

b) The date when the recipient of the goods indicates their approval or acceptance of the goods, or the supplier is notified about the recipient’s decision not to accept the goods.

v) Section 12(5) states that if the goods are removed before it was known whether a supply would take place or not, the time of supply shall be the date of issue of invoice, or the date of receipt of payment, whichever is earlier.

vi) Section 12(6) clarifies that for determining the time of supply in cases where the supplier is entitled to a tax deduction at source, the time of supply shall be the date on which the supplier receives the payment.

Overall, Section 12 serves as a crucial guideline for determining the time of supply for goods under the GST regime in India. Understanding these provisions helps businesses ensure compliance with tax laws, avoid penalties, and manage their tax liabilities efficiently.

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Note: The CGST Act 2017 has been notified vide GOI Notification dt. 12/04/2017, which has subsequently been amended through CGST (Extension to J&K) Act 2017, Finance Act 2018, CGST Amendment Act 2018, Finance Act 2019, Finance Act 2020, Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance 2020, Finance Act 2021, Finance Act 2022 including various Notifications issued by the Govt./ CBIC from time to time, relating to the commencement dates of various Sections/ Provisions in the respective CGST/ Amendment Acts, wherever required. Information on this page is a Section-wise compilation of the Amendments made by various Notifications issued by CBIC from time to time, with best possible efforts for accuracy. In any case, E&OE. For official/ updated information, please visit CBIC website.