GST on Advance Received

1. Liability to Pay GST on Advances for Goods and Services

• Section 12(2)(b) (Time of Supply of Goods):
• • GST on goods is payable at the earliest of:
  • • Date of issue of invoice.
    • Last date on which the invoice is required to be issued.
    • Date of receipt of payment (advance).

Exception: As per the Notification No. 66/2017-Central Tax, dated 15.11.2017, GST is no longer payable on advances received for the supply of goods for taxpayers with turnover exceeding ₹1.5 crore. For small taxpayers (turnover less than ₹1.5 crore), this change applies from Notification No. 40/2017-Central Tax, dated 13.10.2017.

• Section 13(2)(b) (Time of Supply of Services):
• • GST on services is payable at the earliest of:
  • • Date of issue of invoice.
    • Date of receipt of payment (advance).

Thus, GST is still payable on advances received for services.

2. Receipt Voucher for Advances

• Rule 50 of the CGST Rules, 2017:
• • When an advance payment is received, the supplier must issue a receipt voucher.
  • The receipt voucher should include:
  • • Name, address, and GSTIN of the supplier.
    • Serial number and date of receipt voucher.
    • Details of goods/services.
    • Amount and rate of tax.
    • Place of supply and other mandatory details.

3. Works Contract

• Section 2(119) defines a works contract as a composite supply of goods and services.
• GST on works contract advances is governed by Section 13(2)(b) (for services).
• GST becomes payable at the time of receipt of advance for such composite supplies.

4. Adjusting GST on Final Invoice

• Section 31(3)(d) (CGST Act, 2017):
• • Where advance payment is received, the supplier is required to adjust the GST already paid on the final invoice.

5. Exceptions to GST on Advances

• Notification No. 66/2017-Central Tax exempts advances for the supply of goods (post-October 2017).
• Advances for exempt or non-taxable supplies are not subject to GST (as per Section 11 and related notifications).

Summary Table of Key Provisions

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