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GST on advance

siril (student) (508 Points)

04 May 2017

is it true that GST has to pay on advance amount received if yes then how much it is

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7 Replies

CA Mayur Todmal (Practicing CA) (7645 Points)
Replied 04 May 2017

YES , at present, service tax is payable on advance money received towards supply of service , same way gst is payable on advance received towards supply of service or goods.

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Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 05 May 2017

We need to read the defintion of consideration in the GST Act which diffrentiates between an advance and deposit. If amount is an advance then GST payable on receipt of payment as per the time of supply.

If it is a deposit then not payable.

Mahesh Addagatla (3 Points)
Replied 06 May 2017

hi everyone,

Madukar.. r u trying to say ..that...
1. GST is applicable on advances recvd against any procurement/services??
and if any security deposits.. then NO GST is applicable??

2. for ex: I charged GST on advance.. at certain X rate then in this case when i recv the invoice then i again need to charge GST in this?? how this works?

3. in advance if i charge GST, then while booking do i need to input any HSN/SAC Code?

rgds
mahesh

Vinod Araveti (Practicing CA) (1180 Points)
Replied 06 May 2017

Deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unles the supplier applies such deposit as consideration for the said supply.

When GST is paid on the advance then, while issuing the Invoice for that supply, GST needs to charged on the value after adjusting advance money against the invoice value.

CA. K V Krishna Kumar (Manager - Finance) (51 Points)
Replied 06 May 2017

Sir, the following is my understanding when it comes to tax liability on advances received. Please correct me if I'm wrong. time of supply of service definition Comes into picture when advance is received for any service. In that case, a tax invoice is to be raised u/s 31. As defined in that section, tax liability Comes into picture only when tax invoice is raised. As per the invoice rules , a receipt voucher has to be raised in the format provided , when an advance is received against any goods. Receipt voucher is for information purposes only. Further, where there is difference in bill amount at the time of completion of service, if such difference is above rs.1000, time of supply for such additional amount charged for service is the date of receipt ( booking in books or credit in bank, whichever is earlier).

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Vinod Araveti (Practicing CA) (1180 Points)
Replied 07 May 2017

Hi Krishna,

Section 13 of CGST Act 2017 talks about when the liability to pay tax araises and Section 31 of CGST Act 2017 talks about when we should raise invoice.

As per section 31(3)(d) of CGST Act 2017, receipt voucher should be issued at the time of receipt of advance, not the Tax inovice.

I am not sure from from where you got the point that receipt voucher is required to be raised only when the advance is received against the supply of goods. Receipt voucher needs to be raised when advance is received against the supply of goods or services.