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What is Time of Supply for Services under Reverse Charge?

In our earlier post, we explained Time of Supply for Goods on Reverse Charge. In this post, we have attempted to explain Time of Supply for services under Reverse Charge.

Recap: What is Reverse Charge Mechanism?

The government has introduced the Reverse Charge mechanism in India to ensure that the tax is duly collected on the sale of goods/ services from various unorganized sectors, which will further increase tax compliance and tax revenues. Under this mechanism, the recipient of goods/ services is liable to pay the tax on goods/ services received to the credit of the Government unlike forward charge, where the supplier has to pay the tax.

Determining Time of supply for services under reverse charge in GST India is less complicated in comparison to point of taxation under Service Tax in the earlier tax regime. The payment window however has reduced from 3 months to 60 days from the date of invoice. The time of supply on services under reverse charge shall be the earliest of the following dates:-

(a) The date of payment, or

(b) The date immediately after 60 days from the date of issue of invoice by the supplier

If for any reason, the above dates cannot be determined (a) or (b), then the time of supply will be the date of recording the supply in the books of the recipient of service. Furthermore, the date of payment shall be earlier of-

  1. The date on which the recipient entered the payment in his books, or
  2. The date on which the payment is debited from his bank account

Example for reverse charge:

1      Date of payment 15th July 2018

2      Date of invoice 1st July 2018

3      Date of entry in books of receiver 18th July 2018

Time of supply of service 15th May 2018

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