Services are a strange beast under GST. With goods, you can at least point to a box, a truck, a warehouse, and say, “Look, the supply happened on this date.” With services, there’s no such clarity. When exactly did a lawyer’s advice finish? Or when does a Netflix movie count as supplied? It’s not as simple as moving goods from one place to another.
That’s why the law came up with the idea of time of supply of services—basically, a way of saying: “Here’s the exact point when GST kicks in.” If you get this wrong, you either pay too early (locking up your money) or too late (and get hit with penalties).
The Thumb Rule Everyone Starts With
For most services, GST uses a simple trick. It says: look at two things—when you issued the invoice and when you got paid. Whichever came first, that’s when GST becomes due.
Picture this: You’re running a small digital marketing agency. On June 10th, you send a client the invoice. They take their sweet time and only pay you on June 25th. According to GST, the supply date is June 10th because that’s when you raised the invoice.
Now flip the story. The client pays you in advance on June 5th, but you don’t issue the invoice until June 15th. In this case, GST says June 5th is the time of supply. The government basically doesn’t like waiting—if money comes in before the paperwork, tax liability starts right then.
What If You’re Late With the Invoice?
Not everyone runs their books perfectly. Sometimes you complete the service and then sit on the paperwork. The law doesn’t give you a free pass here. If you delay the invoice beyond 30 days of finishing the service, GST falls back on the date the service was completed, or the date of payment—whichever happened earlier.
I know a consultant who finished a project on July 1st but only got around to sending the invoice on August 20th. The client paid on August 25th. The tax officer didn’t care about August—GST was counted from July 1st, the day the service actually finished. That’s how the rule works: you can’t push tax liability forward just because you’re slow with paperwork.
Advances Are Still Taxable
This is where many small service providers trip up. For goods, the rule changed—advances no longer attract GST until supply happens. But for services, advances still mean immediate tax.
Think about a wedding planner. A couple books them in March for a December wedding and pays an advance of ₹1,00,000. The planner smiles, spends some of that money on decorations, and thinks they’ll deal with tax later. Wrong move. GST was already payable in March itself, the moment that advance hit the account.
Reverse Charge—When You Pay the Tax Yourself
Here’s another twist. Sometimes, it’s not the service provider but the recipient who pays GST. That’s called Reverse Charge Mechanism (RCM). And the time of supply works a little differently here.
Instead of looking at invoice or payment only, the law says: whichever is earlier—the day you make the payment or 60 days from the invoice date.
Example: You hire a lawyer. The invoice is dated August 1st, but you don’t pay until September 20th. Sixty days from August 1st is September 30th. In this case, GST kicks in on September 20th (the payment date), because that came earlier. But if you had delayed even further, the law would’ve said September 30th, whether you paid or not.
The Voucher Puzzle
Vouchers can also complicate things. If the voucher is linked directly to a service—for example, “One Spa Session”—then GST is due on the day you issue the voucher. But if it’s a generic gift card, like ₹2,000 balance to be used anytime, GST applies only when the customer actually redeems it.
So, if a salon issues a “Hair Spa Voucher” on October 1st, the GST clock starts ticking that day. But if they issue a ₹1,000 card and the customer uses it in November, the GST liability starts in November.
Everyday Scenarios That Make It Real
Let’s put this in simple day-to-day terms.
- A chartered accountant issues an invoice on July 10th, and the client pays on July 20th. GST time = July 10th.
- A business coach collects an advance of ₹25,000 on September 1st for a program scheduled later. GST doesn’t wait—it applies from September 1st.
- Legal services under RCM: invoice dated October 1st, no payment till December 5th. The law says time of supply = November 30th (60 days from October 1st).
- Subscriptions like Netflix are even simpler. If they bill you on the 1st of every month, that’s the GST date, month after month.
See the pattern? The law always looks for an anchor—either invoice date, payment date, or a statutory cut-off.
Why This Trips Up Businesses
I’ve met many service providers—small consultants, designers, tutors—who just follow one simple idea: “I’ll pay GST when I get paid.” Sounds logical, but it’s wrong. If you issued the invoice earlier, or if you collected an advance, GST might already be due.
On the flip side, I’ve seen accountants for big firms mess up reverse charge rules, missing the 60-day window. That’s not just a late fee issue—it creates mismatches in returns and ITC claims, which is a nightmare during audits.
Wrapping It All Together
So, what’s the big takeaway here? For services, GST isn’t waiting for you to feel ready. It’s looking at hard dates—invoice issued, advance received, payment made, or contract deadlines. Whichever comes first, that’s when tax liability is born.
The simple way to remember:
- Invoice or payment, whichever comes earlier.
- For advances in services, GST applies immediately.
- Under RCM, pick payment date or 60 days, whichever comes earlier.
- Vouchers? If specific, tax on issue. If general, tax on redemption.
- Late fees, penalties, interest? Tax applies when you collect them.
Services may be intangible, but the rules try to make them as concrete as possible. If you keep an eye on these triggers, you’ll save yourself a lot of headaches, and your GST returns will match without those dreaded red flags in the portal.
