Generally, GST is imposed on a supplier of goods and service at the time of receipt of payment. However, in some cases, an advance payment is first made by the recipient of the goods or/and service or both to the supplier. In this article, we will discuss the applicability of GST on advance payments.

GST on Advance Payment

When a payment is made ahead of its actual schedule such payment is termed as advance payment, such as making the payment for the goods or service before the receipt of goods or service. In addition to this, sometimes the supplier of the goods and service requires an advance payment as a safeguard against non-payment, or to cover its costs for supplying a product or rendering of a service.

For example, the rent of a banquet hall is Rupees 1,00,000 for a single day accommodation. To ensure that the booking gets confirm we have to make an upfront payment of Rupees 15,000 to the owner. This upfront payment is called an advance payment.

As mentioned above, GST is to be paid at the time of delivery of the goods or completion of services. However, an exception to this rule is the receipt of advances for Services. Therefore, If a supplier demands an advance payment before rendering the services, GST has to be paid on the advance amount even if  service has not yet been rendered.

GST Advance Receipt Voucher

The advance receipt voucher is required to contain the following details in order to comply with the GST rules:

  • Name, address and GST Identification number of the supplier of the goods or/and service;
  • The advance receipt voucher must contain a consecutive serial number not exceeding sixteen characters, containing alphabets or numerals or special characters;
  • Date of issue;
  • Name, address and GST Identification Number, if registered, of the recipient;
  • Details of the of goods or services;
  • Amount of advance received;
  • The rate of tax;
  • Amount of tax charged in regard to taxable goods or services;
  • Place of supply along with the name of State and its code
  • Whether the GST is payable under the reverse charge basis; and
  • Signature or digital signature of the supplier or his authorised representative.

Treatment of Advance Received In GST Return

Details of the amount received as the advance are required to be mentioned in sr. no. 11A of the GSTR – 1 return. As it shows the figure of the advance money received in the tax period for which invoice has not been issued.

Additionally, it is important to note that in sr. no. 11A of the GSTR – 1 return figures of the advance money received must be bifurcated in two parts i.e. advance money received against intra-state supplies and advance money received against inter-state supplies. However, consolidated figures of the advance money received are to be stated in the same, details of each advance money received need not to be mentioned.

The gross amount of advance money received is required to be mentioned under the head ‘Gross Advance Received / Adjusted’ and matching tax liability is required to be reflected under ‘Central’ and ‘State/ UT’ head in case of intra-state supplies and under ‘integrated’ head in case of inter-state supplies.

More Under Goods and Services Tax

17 Comments

  1. shankar n says:

    Under Works Contract if any advance /material received from owner and same shall be deducted from bill in that case gst applicable on advance/material.

  2. shankar n says:

    in works contract any material or advance received from owner and same shall be deducted from Bill in that case gst applicable on advance or material .

  3. CA Lalit Munoyat says:

    Government of India
    Ministry of Finance
    (Department of Revenue)
    [Central Board of Excise and Customs]
    Notification No. 66/2017 – Central Tax
    New Delhi, the 15th November, 2017

    G.S.R. 1422 (E):- In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this notification referred to as the said Act) and in supercession of notification No. 40/2017-Central Tax, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R.1254(E), dated the 13th October, 2017, except as respects things done or omitted to be done before such supercession, the Central Government, on the recommendations of the Council, hereby notifies the registered person who did not opt for the composition levy under section 10 of the said Act as the class of persons who shall pay the central tax on the outward supply of goods at the time of supply as specified in clause (a) of sub-section (2) of section 12 of the said Act including in the situations attracting the provisions of section 14 of the said Act, and shall accordingly furnish the details and returns as mentioned in Chapter IX of the said Act and the rules made thereunder and the period prescribed for the payment of tax by such class of registered persons shall be such as specified in the said Act.
    [F. No. 349/58/2017-GST(Pt)]
    (Dr .Sreeparvathy S.L.)
    Under Secretary to the Government of India

  4. RAJKUMAR says:

    There are lots of confusions on on the applicability of GST Liability on Advances.

    If you can paste recent notifications in this regard, it would been better to understand the updates

  5. CA S K JAIN says:

    There is no GST liability on advance against supply of goods . It is applicable on advance against supply of services only. The above mentioned statement should be checked and corrected .

  6. CA S K JAIN says:

    As mentioned above,
    If a supplier demands an advance payment before delivering/rendering the goods or services as the case may be, GST has to be paid on the advance amount even if the goods have not been delivered or service has not yet been rendered.–
    It is not correct. GST liability on advance payment is applicable in case of advance against supply of service only not no supply of goods .

  7. CA. C V SURYAM says:

    Yes, as per notification no.66/2017-CT dt.15/11/2017, no GST is required to be paid on advances received against supply of goods. Kindly correct by posting corrigendum, otherwise readers will unnecessarily be mislead.

  8. Rohan Lahoti says:

    If advance is received and contract gets cancelled then how to recover the gst amount paid at time of advance received and whether it should be adjusted in ITC

  9. Sanjeev Gupta says:

    Yes there is no GST on Advance against supply of goods. It’s applicable only on Advance received against supply of services. This change was made effective since Nov 2017.

  10. Vipin Kutumbale says:

    What is position advance of services 600000/- in Oct-18 now contract cancelled, advance re paid to cusomter (un registered) in Dec 2018 amount where to show GSTR-1

  11. Suresh Gupta says:

    Paid advance maintenance money for। a year but company neither issuing GST invoices n receipts, where n how I can file a complaint against this

    1. CA. C V SURYAM says:

      Yes, as per notification no.66/2017-CT dt.15/11/2017, no GST is required to be paid on advances received against supply of goods. Kindly correct by posting corrigendum, otherwise readers will unnecessarily be mislead.

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