Time of Supply Under Reverse Charge: Goods and Services Compared

Under reverse charge, the recipient of goods or services is liable to pay GST instead of the supplier. The time of supply rules for reverse charge are different from forward charge and are governed by Section 12(3) for goods and Section 13(3) for services.

Time of Supply for Goods Under Reverse Charge

Section 12(3) of the CGST Act states that for reverse charge supplies of goods, the time of supply is the earliest of:

• Date of receipt of goods.
• Date of payment.
• Date immediately following 30 days from the date of issue of invoice by the supplier.
• Date of entry in the books of account of the recipient.

Where it is not possible to determine the time of supply under these, it shall be the date of entry in the recipient's books of account.

Time of Supply for Services Under Reverse Charge

Section 13(3) provides that for reverse charge supplies of services, the time of supply is the earliest of:

• Date of payment.
• Date immediately following 60 days from the date of issue of invoice by the supplier.
• Date of entry in the books of account of the recipient.

Where not determinable, it shall be the date of entry in the recipient's books of account.

Key Differences

Invoice Period

• Goods: 30 days from invoice date.
• Services: 60 days from invoice date.

Receipt of Goods

Only for goods, receipt of goods is an explicit trigger. For services, there is no separate "date of receipt" trigger.

Payment Date

Both consider the date of payment. For reverse charge, "payment" is the payment made by the recipient to the supplier, not advance to supplier. Advances to supplier do not trigger RCM.

Practical Examples

Goods Under RCM

Supplier issues invoice on 1 April. Recipient receives goods on 5 April. Payment is made on 20 April. Entry in books on 4 April.

Earliest:

• Receipt of goods: 5 April
• Payment: 20 April
• 30 days from invoice: 1 May
• Books entry: 4 April

Time of supply = 4 April (date of entry in books), as it is the earliest.

Services Under RCM

Supplier issues invoice on 1 January. Payment made on 15 March. Entry in books on 10 January.

Earliest:

• Payment: 15 March
• 60 days from invoice: 2 March
• Books entry: 10 January

Time of supply = 10 January (date of entry in books).

Import of Services

For import of services by a taxable person from a related person or any establishment outside India, Schedule I deems the supply even without consideration. Time of supply will be determined as above, using invoice date, payment or books entry. If no invoice, the date of entry in books may be the only available trigger.

Self-Invoicing

Under reverse charge, the recipient must issue a self-invoice for the inward supply. The date of self-invoice is generally the date of receipt of goods or services, but the time of supply is determined by the statutory rules, not necessarily the self-invoice date.

Payment of Tax

The recipient must pay GST on reverse charge basis in cash, as the supplier has not charged GST. The recipient can claim input tax credit of this tax in the same month, subject to Section 16 and conditions. Thus, it is often revenue-neutral if ITC is available, but the payment and credit must be reported correctly.

Common Mistakes

• Using forward charge time of supply rules for reverse charge.
• Not tracking invoice date, payment date and books entry.
• Missing the 30-day/60-day deadline.
• Not issuing self-invoice.
• Treating advance to supplier as reverse charge trigger.

How Anuj Desai & Associates Can Help

We help recipients manage reverse charge compliance, determine correct time of supply, issue self-invoices, and reconcile RCM payments with ITC.

Contact Anuj Desai & Associates
Email: office@anujdesaiassociates.com
Phone: 9619456656
Website: https://anujdesaiassociates.com
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