Advance Received Under GST
Advance Received Under GST
With the implementation of Goods and Service Tax Act, there has been tremendous change under various provisions of law. Present article highlights the provisions as applicable to the advance received like time of supply in case of advance received, relevant exemption, treatment of advance received in GST return, treatment of advance received in case of the change in rate.
Time of Supply In Case of Advance Received
In order to determine the correct time of tax payment, one has to analyze the provisions of ‘time of supply’. Provisions of ‘time of supply’ are contained under section 12 of the Central Goods and Service Tax Act, 2017.
As per provision of section 12 (2) of the Central Goods and Service Tax Act, 2017, the time of supply of goods shall be either date of issuance of invoice or the date on which the supplier receives the payment, whichever earlier.
Concluding thereby that time of supply in case of advance received, would be the date on which the supplier receives such payment.
Exemption From Payment of Goods And Service Tax
The exemption from the payment of goods and service tax on advance received has been notified by the central government, vide notification no. 66/2017 – Central Tax dated 15th November, 2017. Following are the important points which can be summed up from the said notification no. 66/2017 – Central Tax dated 15 th November, 2017 –
- Any registered person shall pay central tax on the outward supply of goods at the time of supply as per section 12 (2) (a) of the Central Goods and Service Tax Act, 2017 i.e. date of issue of invoice of the supplier;
- The above exemption is also available in situations attracting provisions of section 14 of the Central Goods and Service Tax Act, 2017 i.e. change in the rate of tax in respect of the supply of goods and services.
- Above exemption is not available to the persons who have opted for composition scheme under section 10.
It must be noted that the exemption under notification 66/2017 – Central Tax dated 15th November, 2017 is available only in case of supply of goods, it is not available in case of supply of services.
Treatment In Goods And Service Tax Return
Details of an advance amount received needs to be mentioned in sr. no. 11A of the GSTR – 1 return. Sr. No. 11A of the GSTR – 1 return shows figures of the advance amount received in the tax period for which invoice has not been issued (tax amount to be added to output tax liability).
It must be noted that in sr. no. 11A of the GSTR – 1 return figures of an advance amount received needs to be bifurcated in two parts i.e. advance received against inter-state supplies and advances received against intra-state supplies. However, consolidated figures of an advance amount received are to be mentioned in the same, details of each advance amount received is not required to be mentioned.
The gross figure of the advance amount received needs to be mentioned under the head ‘Gross Advance Received / Adjusted’ and corresponding tax liability needs to be reflected under ‘integrated’ head in case of inter-state supplies and under ‘Central’ and ‘State/ UT’ head in case of intra-state supplies.
Position of Taxation – Change In GST Rate
As per provisions of section 14 of the Central Goods and Service Tax Act, 2017, for determining the applicable rates following things are essential –
- Supply of goods or services;
- Date of invoice;
- Date of payment
Following table would help to evaluate different situations and applicable tax rates –
| Supply of goods or services is completed before the change in rate | Invoice is not issued, however, payment is received | Old rate |
| Supply of goods or services is completed after the change in rate | Invoice is not issued, however, payment is received | New rate |
| Supply of goods or services is completed after the change in rate | Invoice is issued and payment is also receive | Old rate |
Know more about GST rates in India.
