Whether GST is payable on raising a Tax Invoice irrespective of payment received.

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The Chairman / Secretary,
Saket CHS Ltd.
Thane.

Dear Sirs,
  • Yes, one will need to pay tax even if payment is not received against the GST invoice.
  • The liability of GST arises at the ‘time of supply’.
  • Time of supply in case of supply of goods is “the date of issue of invoice by the supplier or the last date on which he is required to issue the invoice with respect to the supply”.
  • Time of supply in case of supply of services is earlier of below two – The date of issue of invoice by the supplier or the last date on which he is required to issue the invoice with respect to the supply; or The date on which the supplier receives the payment with respect to the supply (i.e., Advance Payment).
  • However if payment not received from client, you may raise credit note anytime to avoid unnecessary gst tax payment on it as a input credit while filing gst return.
When should GST be paid?
The answer to this questiom lies in Point of Supply rules (POS) of GST.
If the supply constitutes supply of a service, then POS is earlier of :
  1. Date of Invoice if the invoice is issued within 30 days of completion of service, otherwise, date of completion of service OR
  2. Date of Payment
If supply constitutes supply of Goods, then POS is earlier of :
  1. Date on which invoice is issued OR
  2. Date of payment
So, if a supplier has issued invoice for his goods/ services, he has to pay GST to govt by 20th of the month following the month in which he issued invoice, whether or not he has actually received payment from his customer.
Therefore, be careful when you are raising the invoices for Repairs and Maintenance.

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