Published 5 October 2026
GST is paid month by month, or quarter by quarter, on the supplies that fall in each period. A supply begun in March, invoiced in April and paid for in May belongs to one of those months, not to all three. Which one is not a matter of accounting policy. The Act fixes it, and calls it the time of supply.
Getting it wrong is costly in two ways. Tax paid in a later month than the one it belonged to carries interest for the gap, under section 50. And where the rate changes between the events, the time of supply decides which rate applies.
This guide covers sections 12, 13 and 14 of the CGST Act.
The liability arises at the time of supply
Section 12(1) states the principle for goods: “The liability to pay tax on goods shall arise at the time of supply”. Section 13(1) says the same for services. Everything else in the two sections is about fixing that moment.
The method is the same throughout. The Act names several events, such as the invoice, the payment, the delivery and the entry in the books, and takes the earlier or earliest of them. Tax is due on whichever event happens first. That is by design: it stops a supplier deferring tax by delaying the invoice while already holding the money, or by delaying the money while the invoice is out.
Goods: invoice or payment, whichever is earlier
Under section 12(2), the time of supply of goods is the earlier of:
(a) the date of issue of invoice by the supplier or the last date on which he is required, under section 31, to issue the invoice with respect to the supply; or (b) the date on which the supplier receives the payment with respect to the supply
The phrase “the last date on which he is required … to issue the invoice” closes the obvious gap. Section 31(1) requires an invoice for goods “before or at the time of” removal of the goods, where they move, or delivery, where they do not. A supplier who removes goods and never invoices them is still taxed as at the date of removal, because that was the last date for the invoice.
The date of receiving payment is itself defined, in Explanation 2. It is the date 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”.
Two consequences follow from Explanation 1, which deems the supply made “to the extent it is covered by the invoice or, as the case may be, the payment”. A part payment fixes the time of supply only for the part paid. And an advance received before the invoice would, on the words of section 12(2), fix the time of supply for that advance.
On advances, though, the section is not the whole picture for goods. Notification No. 66/2017-Central Tax provides that a registered person “who did not opt for the composition levy” pays tax on outward supplies of goods “at the time of supply as specified in clause (a)”, meaning the invoice or the last date for it. That applies even where section 14 governs. In practice, an advance for goods attracts no tax when received. From 1 October 2023, Notification No. 50/2023-Central Tax excludes suppliers of specified actionable claims from this relief. For services there is no such relief, and an advance fixes the time of supply for the amount received.
There is also a small concession. Where a supplier receives up to Rs 1,000 more than the invoice amount, the time of supply for the excess may, at the supplier’s option, be the date of the invoice for that excess.
Services: the invoice deadline decides
For services, the outcome depends on whether the invoice was issued in time. Rule 47 of the CGST Rules requires a services invoice within thirty days of the supply. Insurers, banking companies and financial institutions, including non-banking financial companies, have forty-five days.
Section 13(2) then gives the earliest of three dates:
- If the invoice is issued in time, the date of the invoice or the date of receipt of payment, whichever is earlier.
- If the invoice is not issued in time, the date of provision of the service or the date of receipt of payment, whichever is earlier.
- If neither applies, the date on which the recipient shows the receipt of services in its books.
The structure rewards punctual invoicing. A consultant who completes an engagement on 10 June and invoices on 25 June, within thirty days, with no payment received in between, has a time of supply of 25 June. The same consultant invoicing on 20 July, out of time, has a time of supply of 10 June, the date the service was provided. The June return is then the one that should have carried the tax, and interest runs from its due date.
Reverse charge: the recipient’s dates
Where tax is payable by the recipient under reverse charge, the supplier’s invoice no longer governs. The recipient’s own records do.
For goods, section 12(3) takes the earliest of:
- the date of receipt of the goods
- the date of payment, as entered in the recipient’s books or debited to its bank account, whichever is earlier
- “the date immediately following thirty days from the date of issue of invoice” by the supplier
For services, section 13(3) takes the earlier of:
- the date of payment, as entered in the recipient’s books or debited to its bank account, whichever is earlier
- the date immediately following sixty days from the supplier’s invoice, where the supplier is required to issue it
- the date of issue of the invoice by the recipient, where the invoice is to be issued by the recipient
The third clause for services was inserted by the Finance (No. 2) Act, 2024. It deals with supplies where the recipient, not the supplier, is required to raise the invoice.
Where none of these dates can be determined, the time of supply is the date of entry in the recipient’s books. One rule applies only to cross-border transactions between associated enterprises. Where the supplier of services is outside India, the time of supply is the date of entry in the recipient’s books or the date of payment, whichever is earlier. The sixty-day limb does not apply to them.
Vouchers no longer have a rule of their own
Until 30 September 2025, sections 12(4) and 13(4) gave vouchers a separate rule. The time of supply was the date of issue of the voucher, if the supply was identifiable then, and otherwise the date of redemption. The Finance Act, 2025 omitted both sub-sections with effect from 1 October 2025. For periods before that date, the old rule still governs.
Interest and late fees charged to a customer
Sections 12(6) and 13(6) deal with one recurring situation. When a supplier charges a customer interest, a late fee or a penalty for delayed payment, that amount is part of the value of the supply. The time of supply for it is “the date on which the supplier receives such addition in value”. It is taxed when collected, not when charged.
When the rate changes
Rates change by notification, and transactions in progress often straddle the date. Section 14 overrides sections 12 and 13 for these cases. It looks at three events: when the goods or services were supplied, when the invoice was issued and when payment was received. Each falls either before or after the change.
The six cases in the section reduce to one rule. Whichever side of the change holds two of the three events decides the rate. The time of supply is the invoice or payment that falls on that side, or, if both do, the earlier of them.
| Supplied | Invoice | Payment | Time of supply | Rate |
|---|---|---|---|---|
| Before | After | After | Earlier of invoice and payment | New |
| Before | Before | After | Invoice | Old |
| Before | After | Before | Payment | Old |
| After | Before | After | Payment | New |
| After | Before | Before | Earlier of invoice and payment | Old |
| After | After | Before | Invoice | New |
A proviso deals with payments that are slow to reach the bank. If the payment is credited to the bank account more than four working days after the change, the date of receipt of payment is the date of that credit, not the date of entry in the books.
Fixing the time of supply
The order of analysis is:
- Is the supply of goods or of services? Section 12 governs one and section 13 the other.
- Is tax payable by the supplier or by the recipient under reverse charge? If reverse charge, apply sub-section (3) of the relevant section, using the recipient’s dates.
- Otherwise, for goods, find the invoice date, or the last date for it under section 31, and the payment date, and take the earlier.
- For services, check whether the invoice met the deadline in rule 47. If it did, take the earlier of invoice and payment. If it did not, take the earlier of provision of service and payment.
- If the rate changed while the transaction was in progress, set sections 12 and 13 aside and apply section 14.
- Interest, late fees and penalties charged for delayed payment take their own time of supply, when received.
The next guide deals with the value of supply: the amount on which the tax, now placed in a State and in a month, is charged.