GST on advance paid for import of material
This query is : Resolved
08 August 2017
can anyone please guide on the applicability of GST On advance paid for the import of materials from outside India?? do we need to pay IGST on advance immediately??? please clarify.......
08 August 2017
No, no need to pay immediate but your liabilities arises & you have show this liability in your GST inward return.
08 August 2017
thanks for the reply... jus fo
08 August 2017
thanks for the reply jus for more clear understanding pls confirm the following
1. liability will be discharged only on receipt of bill of entry/ material
2. in GSTR 2 this needs tobe reflected only as liability.....
pls confirm whether this understanding is correct
26 July 2024
When dealing with advances paid for the import of materials, understanding the GST implications is crucial. Here’s a comprehensive explanation of how GST applies to advances for imports:
### **1. GST on Advance Paid for Import of Goods**
**a. **Liability for GST on Advance:**
- **IGST on Advance Payment:**
- When an advance is paid for the import of goods, you are liable to pay Integrated Goods and Services Tax (IGST) on that advance. This is applicable as per the provisions of GST on imports.
- **Timing of Liability:**
- **IGST is payable at the time of advance payment** and not just upon receipt of the Bill of Entry or the physical receipt of goods. The liability to discharge GST arises at the time of making the advance payment.
**b. **Documentation and Reporting:**
1. **Bill of Entry:**
- When the Bill of Entry is received (after the goods are imported), the IGST paid on advance is to be adjusted against the final IGST liability on the import.
2. **GSTR-1 and GSTR-3B Reporting:**
- **GSTR-1:** Report the details of the advance payment under the relevant table for advances paid for imports.
- **GSTR-3B:** Report the IGST paid on advance as a liability and also claim it as Input Tax Credit (ITC) when you receive the Bill of Entry and the goods are imported.
### **2. Reflecting Advance Payments in GST Returns**
**a. **In GSTR-2 (GST Returns for Receipts):**
- **Advance Payments:**
- In GSTR-2, you do not need to report the advance payment as an ITC at the time of advance. Instead, you will account for it when the Bill of Entry is filed, and you will be able to claim the ITC at that time.
- **Liability:**
- The advance payment itself should be reflected as a liability in the GSTR-3B, and it should be reported accordingly.
**b. **Adjustment in GSTR Returns:**
1. **GSTR-1:**
- Report the advance received under the section for advance payments.
2. **GSTR-3B:**
- Report the IGST paid on the advance. When the Bill of Entry is received, adjust this advance payment and IGST against the final IGST liability of the import.
### **Summary**
- **IGST on Advance Payment:** You need to pay IGST on the advance immediately upon payment, as per the GST law.
- **Liability Discharge:** The GST liability is discharged when the advance is paid, and not only when the Bill of Entry is received.
- **Reporting in Returns:**
- **GSTR-1:** Report the advance payment.
- **GSTR-3B:** Report IGST on advance as a liability and adjust against final liability upon receipt of Bill of Entry.
**Understanding Your Points:**
1. **Liability on Advance Payment:** Correct, IGST on advance should be discharged at the time of advance payment, not upon receipt of the Bill of Entry.
2. **GSTR Reporting:** Reflect the liability in GSTR-3B, and adjust when the Bill of Entry is received.
For specific cases or further clarification, consulting with a GST professional or tax advisor is recommended to ensure compliance with the latest regulations.
### **1. GST on Advance Paid for Import of Goods**
**a. **Liability for GST on Advance:**
- **IGST on Advance Payment:**
- When an advance is paid for the import of goods, you are liable to pay Integrated Goods and Services Tax (IGST) on that advance. This is applicable as per the provisions of GST on imports.
- **Timing of Liability:**
- **IGST is payable at the time of advance payment** and not just upon receipt of the Bill of Entry or the physical receipt of goods. The liability to discharge GST arises at the time of making the advance payment.
**b. **Documentation and Reporting:**
1. **Bill of Entry:**
- When the Bill of Entry is received (after the goods are imported), the IGST paid on advance is to be adjusted against the final IGST liability on the import.
2. **GSTR-1 and GSTR-3B Reporting:**
- **GSTR-1:** Report the details of the advance payment under the relevant table for advances paid for imports.
- **GSTR-3B:** Report the IGST paid on advance as a liability and also claim it as Input Tax Credit (ITC) when you receive the Bill of Entry and the goods are imported.
### **2. Reflecting Advance Payments in GST Returns**
**a. **In GSTR-2 (GST Returns for Receipts):**
- **Advance Payments:**
- In GSTR-2, you do not need to report the advance payment as an ITC at the time of advance. Instead, you will account for it when the Bill of Entry is filed, and you will be able to claim the ITC at that time.
- **Liability:**
- The advance payment itself should be reflected as a liability in the GSTR-3B, and it should be reported accordingly.
**b. **Adjustment in GSTR Returns:**
1. **GSTR-1:**
- Report the advance received under the section for advance payments.
2. **GSTR-3B:**
- Report the IGST paid on the advance. When the Bill of Entry is received, adjust this advance payment and IGST against the final IGST liability of the import.
### **Summary**
- **IGST on Advance Payment:** You need to pay IGST on the advance immediately upon payment, as per the GST law.
- **Liability Discharge:** The GST liability is discharged when the advance is paid, and not only when the Bill of Entry is received.
- **Reporting in Returns:**
- **GSTR-1:** Report the advance payment.
- **GSTR-3B:** Report IGST on advance as a liability and adjust against final liability upon receipt of Bill of Entry.
**Understanding Your Points:**
1. **Liability on Advance Payment:** Correct, IGST on advance should be discharged at the time of advance payment, not upon receipt of the Bill of Entry.
2. **GSTR Reporting:** Reflect the liability in GSTR-3B, and adjust when the Bill of Entry is received.
For specific cases or further clarification, consulting with a GST professional or tax advisor is recommended to ensure compliance with the latest regulations.
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