Updated: Feb 13
Goods and Services Tax (GST) is a comprehensive tax system that governs the supply of goods and services in India. It is a value-added tax system where the tax is levied on the value addition at each stage of the supply chain. One important aspect of GST is the continuous supply of goods and services.
Continuous supply, as the term suggests, is an ongoing process where the goods or services are supplied periodically and the payments are made periodically, often monthly.
Continuous Supply under GST
Supply of goods or services which are provided or will be provided continuously or on a recurrent basis under a contract with periodic payment obligation.
The contract for supply of services should be for a period exceeding three months and with periodic payment obligations.
The supply of goods or services can be through means of a wire, cable, pipeline, or other conduit.
Time of Issuing Invoice for Continuous Supply of Goods and Services:
The supplier is required to issue an invoice to the recipient on a periodic basis. The invoice must be issued before or after the payment is to be made by the recipient but within the specified time. The invoice must be issued whether or not any payment has been received by the supplier.
The invoice must be issued within 30 days from the date when each event specified in the contract and requiring the recipient to make any payment is completed.
If the supplier of service is a bank/financial institution/NBFC
The invoice must be issued within 45 days from the date of supply of service.The Centre or a State Government may notify the supply of goods or services to be treated as continuous supply of goods or services.
Examples of Continuous Supply of Goods and Services:
Supplying bricks to builders is a continuous supply of goods because there will be periodic supply for a long time.
Telecom and internet services provided by telecom companies are examples of continuous supply of services. For example, the telecom service provider sends a telephone bill every month, as mentioned in the contract with the telecom company.
The invoice should be created when the delivery ends, and it should reflect the extent of the services provided before the stopping. For instance, in a construction agreement that began on August 1st, 2018 and was supposed to be finished by March 2019, if it was halted on November 11th, 2018, the contractor will issue an invoice on November 11th, 2018 that covers the amount of work done up until that point.
In general, it is important for both the supplier and the recipient to keep track of the continuous supply of services in order to accurately calculate and pay the correct amount of GST on the services provided. This is why invoices are issued periodically to document the continuous supply of services and to ensure that the correct GST is paid.
Continuous supply of goods and services under GST is an ongoing process where the goods or services are supplied periodically and the payments are made periodically. The time of issuing the invoice for the continuous supply of goods and services is governed by the provisions under GST. Understanding these provisions is important for businesses to comply with the GST laws and regulations.