BooksIQGST on ADVANCES differs by supply type. For GOODS: no GST on advance — tax is payable only at issue of invoice / removal (Notification 66/2017-CT, w.e.f. 15-Nov-2017). For SERVICES: GST IS payable on the advance at the time of RECEIPT (earlier of invoice or payment) — issue a Receipt Voucher.
Key points
- §12 fixes the TIME OF SUPPLY OF GOODS as the EARLIER of (a) date of issue of invoice (or last date by which invoice should have been issued under §31), or (b) date of receipt of payment.
- HOWEVER, Notification 66/2017-CT (15-Nov-2017) EXEMPTS all registered persons (other than composition dealers) from paying GST on ADVANCES received for SUPPLY OF GOODS — so for goods, tax is effectively due only on invoice / removal, NOT on advance.
- §13 fixes the TIME OF SUPPLY OF SERVICES as the EARLIER of (a) date of invoice if issued within the §31(2) period (30 days), else date of provision of service, or (b) date of receipt of payment.
- There is NO advance exemption for services — so GST on a SERVICE ADVANCE is payable in the month the advance is RECEIVED.
- On receipt of an advance for services the supplier must issue a RECEIPT VOUCHER (§31(3)(d));
- if the supply is later cancelled, a REFUND VOUCHER (§31(3)(e)) is issued.
- 'Date of receipt of payment' is the earlier of the date it is entered in the books or credited to the bank account.
- For RCM supplies the time of supply rules of §12(3)/§13(3) apply instead.
Reference: §§12-13 CGST Act 2017 read with Notification 66/2017-CT
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