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Vat on advance received

Kaushal (Article) (66 Points)

17 January 2013

Is VAT payable on advance received?

A company has collected VAT in advance along with the advance received from the purchaser as on 1/5/12.

The sale is booked as on 31/12/12. Does that make any difference?

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6 Replies

Rajiv Limbachiya (Deputy Manager) (140 Points)
Replied 18 January 2013

VAT is applicable once sales bill booked. Its not applicable on payment recd. So, your VAT payable will applicable for the month of Dec'12.

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shivani (consultant) (122 Points)
Replied 18 January 2013

U may collect VAT in advance from the your buyer and retain,this is paid only after effect of sales.

This is collection of funds in advance for near future supplies--

As a gurantee money --

Remmitance to vat dept only in following month after the sales,

Anand (Chartered Accountant) (166 Points)
Replied 19 January 2013

VAT & Sales Tax Payable only on effect of sale, so CST or VAT is not payable on advance.

MJ Krishnamurthy (ACCT(Retd)) (7197 Points)
Replied 03 February 2013

Mr Kaushal,

I would like to differ onthis matter from the aove learned experts. In Karnataka, also in many other states,advances received towards any intending or future sale is to be treated as turnover and taxes are to be paid as per rules. One can not wait till a sale is confirmed or sale deed registered. Please see rule 3(1)(c) of Karnataka VAT Rules 2005. for reference.........MJK

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