Last updated: 5 August 2026. Time of supply is the date GST law says your liability arose, and it decides which month's return the tax belongs in. For goods it is normally the invoice date. For services it is the earlier of the invoice date and the date you received payment, so an advance is taxed the moment it lands. Reverse charge and rate changes run on their own clocks.
Applicability Note: This guide reflects Sections 12, 13 and 14 of the CGST Act as in force on 5 August 2026, including the omission of the voucher provisions with effect from 1 October 2025. Always verify the current position on gst.gov.in or with a GST professional before deciding which return a supply belongs in.
Who Should Care?
- Service providers who take advances or retainers — taxable when you receive the money, not when the work ends.
- Anyone who invoices late — miss the Rule 47 window and your liability moves back to the date the service was performed.
- Businesses paying tax under reverse charge — the 30- and 60-day limbs can trigger tax months before you pay the supplier.
- Suppliers caught by a rate change — Section 14 decides the rate from the timing of three events, not from your invoice.
1. Why the Date Matters More Than It Looks
Getting time of supply wrong rarely changes how much tax you owe. It changes when, and that is where the cost sits. Tax reported one month late attracts interest at 18% per annum under Section 50(1), the rate notified by Notification No. 13/2017-Central Tax dated 28 June 2017, running from the day after the due date of the return it should have gone into. Where the supply happened is a separate question, answered by the place of supply rules.
2. Goods: The Invoice Date, or the Date You Should Have Invoiced
Section 12(2) sets the time of supply of goods as the earlier of two dates: the invoice date, or the last date you were required to issue it under Section 31, and the date the supplier receives payment.
In practice the payment limb has been switched off since 2017. Notification No. 66/2017-Central Tax dated 15 November 2017 lets every registered person, other than one paying composition levy under Section 10, pay tax on outward supplies of goods under Section 12(2)(a) — the invoice. An advance against a sale of goods therefore carries no GST.
Two categories sit outside that relief and do pay tax on advances. Composition taxpayers were never covered by Notification 66/2017. And Notification No. 50/2023-Central Tax dated 29 September 2023 carved out registered persons supplying specified actionable claims as defined in Section 2(102A), with effect from 1 October 2023.
The second half of Section 12(2)(a) is the part people forget. Never issue an invoice and the time of supply is still the last date you were required to issue one — under Section 31(1), before or at removal where the supply involves movement, otherwise at delivery. Not invoicing does not postpone the liability.
3. Services: Advances Are Taxable, and the 30-Day Clock Is Real
Section 13(2) works differently. Time of supply of services is the earliest of:
- the invoice date, if the invoice is issued within the Rule 47 period, or the date of receipt of payment, whichever is earlier;
- the date the service is provided, if the invoice is not issued in time, or the date of receipt of payment, whichever is earlier;
- the date the recipient records the service in his books, where neither applies.
Two consequences follow. No notification switches off the payment limb for services, so an advance, a retainer or a booking amount is taxable in the month you receive it, even if the work runs for another year. And Rule 47 gives you thirty days from the supply of service to raise the invoice, forty-five if you are an insurer, a banking company or a financial institution including an NBFC. Miss it and the time of supply falls back to the date the service was provided.
Say you complete a consulting assignment on 5 August 2026 and invoice on 20 September 2026. Rule 47 required the invoice by 4 September. Because it was late, the time of supply is 5 August 2026 and the tax belongs in the August GSTR-3B due 20 September 2026 — the same day you finally invoiced. Invoice on 2 September instead and the tax lands in the September return.
The proviso to Section 13(2) softens one edge: where a customer pays up to ₹1,000 more than the invoice value, you may time that excess to the invoice covering it rather than to the date the money arrived.
4. Reverse Charge: Two Clocks, 31 Days and 61 Days
Under reverse charge the recipient pays, and both Sections 12(3) and 13(3) add a limb that fires whether or not anyone has been paid.
| Goods — Section 12(3) | Services — Section 13(3) | |
|---|---|---|
| Receipt of goods | Date the goods are received | Not applicable |
| Payment | Date entered in the recipient's books or debited to his bank account, whichever is earlier | |
| Invoice-based limb | The day immediately following 30 days from the supplier's invoice date (the 31st day) | The day immediately following 60 days from the supplier's invoice date (the 61st day) |
| If none can be determined | Date of entry in the recipient's books of account | |
Say a reverse-charge service invoice is dated 10 June 2026 and you pay it on 20 September 2026. Sixty days run out on 9 August, so the time of supply is 10 August 2026 and the tax goes in the August GSTR-3B, filed by 20 September 2026. Waiting for the payment date would have pushed the tax into the September return, a month late.
Where the supply comes from an unregistered person, you issue the invoice yourself. Rule 47A, inserted by Notification No. 20/2024-Central Tax dated 8 October 2024 with effect from 1 November 2024, requires that self-invoice within thirty days of receiving the supply. From the same date, clause (c) of Section 13(3), notified by Notification No. 17/2024-Central Tax dated 27 September 2024, brings the recipient's own invoice date into the test for services the recipient must invoice.
One more proviso to Section 13(3): where the supplier is an associated enterprise outside India, the time of supply is the earlier of the date of entry in the recipient's books and the date of payment.
5. Vouchers: The Special Rule Went Away on 1 October 2025
Sections 12(4) and 13(4) used to fix a separate time of supply for vouchers — the date of issue where the supply was identifiable then, the date of redemption otherwise. Both were omitted by the Finance Act, 2025 with effect from 1 October 2025, notified by Notification No. 16/2025-Central Tax dated 17 September 2025.
The voucher itself is not a supply. What gets taxed is the underlying supply it is redeemed against, timed by the ordinary Section 12 or 13 rules. If you issue gift vouchers, the entry that used to sit at issue now sits at redemption.
6. Section 14: When the Rate Changes Mid-Transaction
Section 14 takes over whenever the rate changes while a transaction is in flight. It looks at three events — the supply, the invoice and the receipt of payment — on a two-out-of-three test. Two before the change, old rate. Two after, new rate.
| Supply (vs rate change) | Invoice | Payment | Time of supply | Rate |
|---|---|---|---|---|
| Before | After | After | Earlier of invoice and payment | New |
| Before | Before | After | Invoice | Old |
| Before | After | Before | Receipt of payment | Old |
| After | Before | After | Receipt of payment | New |
| After | Before | Before | Earlier of invoice and payment | Old |
| After | After | Before | Invoice | New |
Take the GST 2.0 restructure, effective 22 September 2025. A supply completed on 18 September 2025, invoiced on 25 September and paid on 30 September has two events after the change, so the new rate applies though the goods moved earlier.
The proviso adds an anti-timing guard: where the credit to the supplier's bank account falls more than four working days after the rate change, the date of receipt of payment is the date of that bank credit, not the book entry.
7. What This Means for Your Return Cycle
Report a supply in the wrong month and it reaches your customer's GSTR-2B in the wrong month too, shifting when they can claim credit under Section 16. Fixing it later means an amendment, or a credit or debit note where the value changed. Two habits avoid both: date invoices from the supply, and check unpaid reverse-charge invoices past their 30th or 60th day before month-end.
Key Takeaways
- Goods: the invoice date, or the last date you were required to invoice. Advances carry no GST, except for composition taxpayers and suppliers of specified actionable claims.
- Services: the earlier of the invoice date and the date of receipt of payment, so advances are taxable on receipt.
- Rule 47 gives thirty days from the supply of service to invoice, forty-five for insurers, banks and NBFCs. Invoice late and the liability shifts back to the date the service was provided.
- Reverse charge fires on the 31st day from the supplier's invoice for goods and the 61st day for services, even if you have not paid. Self-invoices for unregistered supplies are due within thirty days under Rule 47A.
- The voucher rules in Sections 12(4) and 13(4) were omitted from 1 October 2025. Tax follows the underlying supply.
- On a rate change, Section 14 decides by which two of supply, invoice and payment fall on the same side of it.
Frequently Asked Questions
Do I have to pay GST on an advance received from a customer?
For services, yes — Section 13(2) makes the date of receipt of payment one of the events that fixes the time of supply. For goods, no: Notification No. 66/2017-Central Tax dated 15 November 2017 lets registered persons pay on the invoice instead. Composition taxpayers, and suppliers of specified actionable claims excluded by Notification No. 50/2023-Central Tax dated 29 September 2023 from 1 October 2023, still pay on advances.
What happens if I issue a service invoice after 30 days?
The time of supply moves to the date the service was provided, under Section 13(2)(b), instead of the invoice date. The tax then belongs in an earlier month's return, and interest under Section 50(1) runs from the day after that return's due date.
When does reverse charge liability arise if I have not paid the supplier?
For services, on the day immediately following sixty days from the supplier's invoice date, under Section 13(3). For goods, the earliest of receipt of the goods, payment, and the day immediately following thirty days from the invoice date, under Section 12(3). Payment is a trigger, not a precondition.
Is GST payable when a gift voucher is issued?
Not since 1 October 2025, when Sections 12(4) and 13(4) were omitted by the Finance Act, 2025, notified by Notification No. 16/2025-Central Tax dated 17 September 2025. Tax attaches to the underlying goods or services on redemption, under the ordinary Section 12 or 13 rules.
Which GST rate applies if the rate changed between my invoice and the payment?
Section 14 looks at three events — supply, invoice and receipt of payment. Whichever side of the change holds two of the three sets the rate. Where the bank credit reaches the supplier more than four working days after the change, the date of that credit is treated as the date of receipt of payment.
Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. GST rules are subject to frequent changes through notifications and circulars. Please consult a qualified tax professional or verify the current provisions on the official GST portal (gst.gov.in) before making any compliance decisions.
Unsure which month an advance, a late invoice or a reverse-charge bill belongs in? Our GST experts can help → gstconsultancy.com