Time of supply is the point at which GST becomes payable. For goods it is the earlier of the invoice date and the last date by which the invoice should have been issued. For services it is generally the earlier of the invoice date (if issued within 30 days) or the date of receipt of payment; if the invoice is late, the date of service. Reverse charge and rate changes follow separate rules.
Time of supply answers a simple question: in which month does GST on a sale become payable? It decides which GSTR-1 and GSTR-3B the sale goes into and when the cash leaves your account. Getting it wrong means interest, even when the full tax is eventually paid.
The rules are in sections 12 (goods), 13 (services) and 14 (rate changes) of the CGST Act, read with the invoice deadlines in section 31. This guide explains each, with dated examples.
What is time of supply under GST?
Time of supply is the date on which the liability to pay tax arises. Once that date is fixed:
- the supply is reported in the return for that tax period,
- tax is payable by that period's GSTR-3B due date, and
- late payment attracts interest from the due date.
It is different from place of supply, which decides which tax (CGST+SGST or IGST); time of supply decides when.
What are the invoice deadlines that drive time of supply?
Section 31 sets the latest date by which a tax invoice must be issued:
| Supply | Invoice must be issued |
|---|---|
| Goods involving movement | Before or at the time of removal of goods for supply |
| Goods without movement | Before or at the time of delivery or making available to the recipient |
| Continuous supply of goods | Before or at the time each statement or payment is issued/received |
| Services | Within 30 days of supply of service |
| Services by insurers, banks, financial institutions, NBFCs | Within 45 days |
| Continuous supply of services | On or before the due date of payment, or on receipt of payment, or on completion of a milestone |
How is the time of supply decided for goods?
Under section 12(2), the time of supply of goods is the earlier of:
- the date of issue of invoice, or
- the last date on which the invoice ought to have been issued under section 31.
The law also lists the date of receipt of payment, but a 2017 notification (No. 66/2017-Central Tax) provides that registered persons other than composition taxpayers pay tax on goods at the invoice stage. So advances received for goods do not trigger GST for regular taxpayers.
Example — goods
A Pune hardware shop receives a ₹50,000 advance on 28 March for steel racks, dispatches them on 3 April and issues the invoice on 3 April.
- Advance on 28 March: no GST, because it relates to goods.
- Removal on 3 April, invoice on 3 April → time of supply 3 April. Report in April's return.
If the clerk dispatches on 3 April but raises the invoice only on 8 April, the time of supply is still 3 April, because the invoice ought to have been issued at removal. The invoice is also late, which is a separate compliance breach.
How is the time of supply decided for services?
Under section 13(2), the time of supply of services is:
| Situation | Time of supply |
|---|---|
| Invoice issued within the 30-day (or 45-day) period | Earlier of invoice date and date of receipt of payment |
| Invoice not issued within the period | Earlier of date of provision of service and date of receipt of payment |
| Neither of the above applies | Date the recipient shows receipt of service in its books |
"Date of receipt of payment" is the earlier of the date the payment is entered in the supplier's books and the date it is credited to the supplier's bank account.
Unlike goods, advances for services trigger GST on receipt. The supplier issues a receipt voucher, pays tax on the advance in that month, and later adjusts it when the invoice is raised.
Example — services with an advance
A Nagpur digital agency agrees a ₹1,20,000 + 18% GST campaign for a local client.
| Date | Event |
|---|---|
| 20 May | Client pays ₹59,000 advance (inclusive of GST) |
| 10 June | Campaign completed |
| 25 June | Invoice issued for ₹1,20,000 + ₹21,600 GST = ₹1,41,600 |
| 5 July | Client pays balance ₹82,600 |
- 20 May advance: taxable value = ₹59,000 × 100 ÷ 118 = ₹50,000; GST = ₹9,000 (₹4,500 CGST + ₹4,500 SGST). Time of supply 20 May; pay in May's return.
- Balance: invoice on 25 June is within 30 days of completion on 10 June, and earlier than the 5 July payment → time of supply 25 June. GST on the remaining ₹70,000 = ₹12,600, payable in June's return.
- Total GST paid: ₹9,000 + ₹12,600 = ₹21,600, matching the invoice.
If the agency had issued the invoice only on 20 July (more than 30 days after 10 June), the time of supply for the balance would be 10 June, the date of provision — still June, but now with a late invoice. Had the work finished on 25 May, a late invoice would have pulled the liability back into May and attracted interest.
What is the time of supply under reverse charge?
When the recipient pays under the reverse charge mechanism, separate rules apply:
| Goods under RCM — earliest of | Services under RCM — earliest of |
|---|---|
| Date of receipt of goods | Date of payment |
| Date of payment | Date immediately after 60 days from the supplier's invoice |
| Date immediately after 30 days from the supplier's invoice | — |
If none can be determined, the date of entry in the recipient's books applies. For services imported from an associated enterprise, the date of entry in the books or date of payment, whichever is earlier, applies.
Which rate applies when the GST rate changes?
Section 14 decides the time of supply where a supply straddles a rate change — something every business experienced with the rate rationalisation effective 22 September 2025 (see GST rates and slabs).
The rule looks at three events — supply, invoice, payment — and, broadly, the rate in force when two of the three occurred applies:
| Supply completed | Invoice issued | Payment received | Rate |
|---|---|---|---|
| Before | Before | After | Old |
| Before | After | Before | Old |
| Before | After | After | New |
| After | Before | Before | Old |
| After | Before | After | New |
| After | After | Before | New |
If all three events fall on one side of the change, the rate on that side applies. For this section, the date of receipt of payment is the date of credit in the bank account if that is more than four working days after the change.
Example. A trader supplied goods on 18 September 2025 (old rate 12%), invoiced on 18 September and received payment on 25 September. Two of three events (supply, invoice) were before the change → old rate 12% applies. Had the invoice been raised on 23 September, two of three events (invoice, payment) would be after → new rate applies.
How do you handle an advance that is later refunded or adjusted?
For services, once you have paid GST on an advance, three things can happen:
- The service is supplied and invoiced. The invoice shows the full value; the tax already paid on the advance is adjusted, and only the balance tax is payable in the invoice month (as in the agency example above).
- The order is cancelled and the advance refunded. Issue a refund voucher against the original receipt voucher. The tax paid on the advance can then be adjusted in the return, provided no supply was made and no invoice issued.
- The advance is adjusted against a different service. Treat it as an advance for the new service and track it in your receipt voucher register.
A simple advances register — date received, amount, receipt voucher number, tax paid, invoice number when adjusted — makes these entries easy to reconcile in GSTR-1, where advances and their adjustments are reported in separate tables.
A quick time-of-supply checklist for each invoice
| Question | If yes |
|---|---|
| Is it goods sold by a regular taxpayer? | Time of supply = invoice date, or date it should have been issued (at removal) |
| Is it a service invoiced within 30 days? | Earlier of invoice date and payment date |
| Is it a service invoiced late? | Earlier of date of service and payment date |
| Was an advance received for services? | Tax on the advance in the month of receipt; issue receipt voucher |
| Is the purchase under reverse charge? | Earliest of payment, receipt or 30/60 days from supplier invoice |
| Did a rate change occur between supply, invoice and payment? | Apply section 14 two-of-three test |
Common mistakes with time of supply
- Paying GST on goods advances — not required for regular taxpayers.
- Not paying GST on service advances — required, with a receipt voucher.
- Raising service invoices late, which pushes time of supply back to the date of provision and often into an earlier month.
- Backdating invoices to fit a month. Invoices should carry the real issue date.
- Using the payment date shown on the cheque instead of the earlier of book entry and bank credit.
- Ignoring the 60-day RCM trigger for services when payment is delayed.
- Applying the new rate to all invoices after a change without checking supply and payment dates.
Billing Software by Betterwork records receipt vouchers for service advances, adjusts them against the final invoice and dates each document on issue, so your GSTR-1 export lands in the right period. The free GST invoice generator is enough for occasional bills.
Key takeaways
- Time of supply decides the tax period in which GST is payable.
- Goods: earlier of invoice date or the date the invoice should have been issued; advances for goods are not taxed for regular taxpayers.
- Services: earlier of invoice date (if within 30 days) and payment; if invoiced late, earlier of service date and payment. Advances are taxed on receipt.
- Reverse charge: earliest of receipt/payment/30 days (goods) or payment/60 days (services).
- Rate changes: the rate in force when two of supply, invoice and payment occurred applies.
This guide is general information, not tax advice. Rules last checked on 20 October 2026; confirm with your tax professional for your situation.