Section 12 – Time of supply of goods

- February 05, 2026

Section 12 of CGST Act, 2017 – Time of Supply of Goods

Updated on: February 2026 (as amended and applicable till date)
Prepared by: Yours Tax Consultant

1. Bare Act Text – Section 12 (Effective Provisions)

Section 12(1):
The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section.

Section 12(2):
The time of supply of goods shall be the earlier of the following dates:

Date of issue of invoice or last date on which invoice is required to be issued under Section 31
Date on which the supplier receives payment

Section 12(3):
In case of supplies liable to tax under reverse charge, the time of supply shall be the earliest of:

Date of receipt of goods
Date of payment
Date immediately following thirty days from the date of issue of invoice

Section 12(4):
Where it is not possible to determine the time of supply under sub-sections (2) or (3), the time of supply shall be the date on which the periodical return is required to be filed.

Section 12(5):
In case of addition in value by way of interest, late fee or penalty, the time of supply shall be the date on which the supplier receives such additional value.

2. Objective of Section 12

Section 12 determines the point in time when GST liability arises in respect of supply of goods.

Correct determination of time of supply is critical because it decides:

Tax period in which GST is payable
Applicability of rate of tax
Interest liability for delay

3. General Rule – Section 12(2)

For forward charge supplies of goods, GST becomes payable at the earlier of:

Date of invoice (or last date for issuing invoice)
Date of receipt of payment

This rule ensures that tax cannot be deferred by delaying invoice or payment.

4. Time of Supply in Reverse Charge Cases – Section 12(3)

In reverse charge cases, the liability shifts to the recipient.

Accordingly, time of supply is the earliest of:

Date of receipt of goods
Date of payment (earlier of entry in books or bank debit)
30 days from date of invoice issued by supplier

This provision is especially relevant for:

RCM on notified goods
RCM under Section 9(4) (where applicable)

5. Residual Rule – Section 12(4)

Where time of supply cannot be determined under normal rules, the fallback rule applies.

In such cases, time of supply is:

The date on which the return is required to be filed.

This provision is rarely invoked but acts as a safety net.

6. Interest, Late Fee or Penalty – Section 12(5)

Any additional consideration in the nature of:

Interest
Late fee
Penalty

is taxable at the time it is actually received.

This avoids upfront taxation on contingent amounts.

7. Section 12 Read with Relevant CGST Rules

Time of supply provisions must be read together with the following CGST Rules:

Invoice timing under Rules 46 and 47 directly impacts the time of supply under Section 12.

8. Practical Issues & Common Errors

Frequent mistakes observed in practice:

Ignoring advance receipt for goods (pre-amendment cases)
Wrong determination of payment date in RCM
Mismatch between invoice date and return period

Such errors often lead to interest demands during audits.

9. Litigation Aspects of Section 12

Disputes commonly arise on:

Date of receipt of payment
RCM time limits
Application of correct tax rate due to timing difference

Courts have consistently held that time of supply provisions must be strictly applied.

10. Related Provisions

11. Professional Tip

Always align invoice dates, payment receipts and return filing periods. Wrong determination of time of supply automatically attracts interest liability even if tax is otherwise paid correctly.

Disclaimer: This article is based on the CGST Act, CGST Rules, notifications and legal position applicable till date. Future amendments or judicial pronouncements may change the interpretation.

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