Section 14 – Change in Rate of Tax in Respect of Supply of Services
Section 14 of CGST Act, 2017 – Change in Rate of Tax in Respect of Supply of Services
Updated on: February 2026 (as amended and applicable till date)
Prepared by: Yours Tax Consultant
1. Bare Act Text – Section 14 (Effective Provision)
Section 14:
Notwithstanding anything contained in section 12 or section 13,
the time of supply, where there is a change in the rate of tax in respect of services,
shall be determined in the following manner, namely:—
(a) where the service has been supplied before the change in rate of tax:
- if the invoice for the same has been issued and the payment is also received after the change in rate of tax, the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; or
- if the invoice has been issued prior to the change in rate of tax but payment is received after the change in rate of tax, the time of supply shall be the date of issue of invoice; or
- if the payment is received before the change in rate of tax but invoice is issued after the change in rate of tax, the time of supply shall be the date of receipt of payment;
(b) where the service has been supplied after the change in rate of tax:
- if the invoice has been issued prior to the change in rate of tax but payment is received after the change in rate of tax, the time of supply shall be the date of receipt of payment; or
- if the payment has been received before the change in rate of tax but invoice is issued after the change in rate of tax, the time of supply shall be the date of issue of invoice; or
- if the invoice has been issued and payment is also received before the change in rate of tax, the time of supply shall be the date of issue of invoice or the date of receipt of payment, whichever is earlier.
2. Objective of Section 14
Section 14 provides a special mechanism to determine time of supply when:
- Rate of GST on services is revised upward or downward
- Invoice, payment and supply fall on different dates
This section overrides the general provisions of Section 12 and Section 13.
3. When is Section 14 Applicable?
Section 14 applies only when:
- There is a change in GST rate by notification
- The supply, invoice and payment are not on the same date
If all three events occur either before or after the rate change, Section 13 alone will apply.
4. Services Supplied Before Change in Rate – Clause (a)
Where service is completed before the rate change, the determining factor is the timing of invoice and payment.
| Invoice | Payment | Time of Supply |
|---|---|---|
| After change | After change | Earlier of invoice or payment |
| Before change | After change | Date of invoice |
| After change | Before change | Date of payment |
5. Services Supplied After Change in Rate – Clause (b)
Where service is provided after the rate change, the law ensures that new rate is not avoided.
| Invoice | Payment | Time of Supply |
|---|---|---|
| Before change | After change | Date of payment |
| After change | Before change | Date of invoice |
| Before change | Before change | Earlier of invoice or payment |
6. Practical Importance of Section 14
Section 14 is frequently applied in:
- Change in GST rate on works contract services
- Telecom and subscription-based services
- Long-term service contracts
Wrong application may result in:
- Short payment of tax
- Interest liability
- Audit objections
7. Section 14 Read with Relevant CGST Rules
Though Section 14 is self-contained, it must be read with the following CGST Rules:
Correct determination of invoice date under Rules 46 and 47 is crucial for applying Section 14.
8. Judicial & Litigation Perspective
Courts have consistently held that:
- Section 14 overrides general time of supply provisions
- Rate applicable depends strictly on statutory timing rules
- Equity or intention is irrelevant
Strict compliance with Section 14 is mandatory.
9. Related Provisions
- Section 9 – Levy and Collection of Tax
- Section 12 – Time of Supply of Goods
- Section 13 – Time of Supply of Services
10. Professional Tip
Whenever GST rate changes, immediately map: date of service, invoice date and payment date. Section 14 errors are common and heavily penalised in audits.
Disclaimer: This article is prepared considering the CGST Act, rules, notifications and legal position applicable till date. Future amendments or judicial pronouncements may require revision.
Comments