𝗧𝗵𝗲 𝗚𝗦𝗧 𝗜𝗻𝘃𝗼𝗶𝗰𝗶𝗻𝗴 𝗠𝘆𝘁𝗵

Businesses often believe skipping an invoice avoids GST liability. Under the Central Goods and Services Tax Act, tax liability arises from the supply of goods or services, not the creation of a billing document.

Section 12 and Section 13 of the CGST Act define the time of supply. Tax liability occurs at the earliest of three events: issuance of an invoice, the last date an invoice must be issued under Section 31, or receipt of payment.

A supplier delivers goods on day one, receives payment on day ten, and issues no invoice. Tax liability exists on day one or day ten, whichever comes first. Omitting the invoice does not eliminate the tax requirement.

Unbilled supplies lead to unpaid tax. Section 73 and Section 74 mandate recovery of unpaid tax along with interest under Section 50 at 18 percent per annum. Penalties for non-issuance of invoices under Section 122 start at 10,000 rupees or the amount of tax evaded, whichever is higher.

Record every transaction at the time of delivery or payment receipt. Align accounting entries with physical movement of goods and bank receipts to ensure compliance.

Which transaction type causes the most confusion regarding time of supply? Drop questions in the comments.

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