TMI BlogGST on advances received for future suppliesX X X X Extracts X X X X X X X X Extracts X X X X ..... ly is fixed at the point when advance is received, irrespective of the fact whether the supply is made or not. Accordingly, GST needs to be paid with reference to the time at which advance is received, if any, and this requires compliances with a few procedures, documentation and reconciliation of taxes paid on the advances and supply made. As per the explanation 1 to Section 12 of the CGST Act, 2017 a supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment. For instance, an advance of ₹ 10 lacs is received for a supply worth ₹ 1 crore to be made in future. The time of supply to the extent of advance received i.e. ₹ 10 lacs shall be at the time of receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the same was also issued after the change in tax rate, the time of supply, according to section 14 of the CGST Act, is the date of issue of invoice. Therefore, 10% additional tax paid can either be adjusted against the balance payment of tax against that particular supply or claimed back as refund. For the categories of taxpayers who are required to discharge GST on Advances, the following would be relevant. Taxability of Advance payment on the basis of GST registration is as under: For Registration under GST act: (a) Composition Scheme (b) Non composition/Regular Scheme For Taxability under Regular Scheme: Whether supply is of : (a) Goods (i) exempted from paying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union territory tax or cess); h) amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess); i) place of supply along with the name of State and its code, in case of a supply in the course of inter-State trade or commerce; j) whether the tax is payable on reverse charge basis; and k) signature or digital signature of the supplier or his authorised representative. What if the rate of tax or place of supply is not determinable at the time of receiving advance payment? The proviso to Rule 50 of the Rules ibid provides that where at the time of receipt of advance, if the rate of tax is not determinable, the tax shall be paid at the rate of 18% a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yphen or dash and slash symbolized as - and / respectively, and any combination thereof, unique for a financial year; c) date of its issue; d) name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient; e) number and date of receipt voucher issued in accordance with the provisions of rule 50; f) description of goods or services in respect of which refund is made; (g) amount of refund made; g) rate of tax (central tax, State tax, integrated tax, Union territory tax or cess); h) amount of tax paid in respect of such goods or services (central tax, State tax, integrated tax, Union territory tax or cess); i) whether the tax is payable on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of sub-sections (3) and (4) of section 9, a registered person, whose aggregate turnover in the preceding financial year did not exceed one crore rupees, may opt to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not exceeding, (a) one per cent of the turnover in State or turnover in Union territory in case of a manufacturer or trader, (b) two and a half per cent of the turnover in State or turnover in Union territory in case of persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II, and subject to such conditions and restrictions as may be prescribed. The provisions of Section 10 are subject to Section 9(3) (4) which would mean t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns would indicate that a composition dealer will not have to pay any tax on advances received, if such advances pertain to his outward supplies. The advances received and goods returned do not form part of taxable supplies and do not form part of the turnover in a state at the end of the quarter (tax period) for the purpose of computing turnover in a state. Obligation of taxpayer when an advance is received? Issue a Receipt voucher to the person paying advance. The receipt voucher will contain details like amount of advance, the rate of tax applicable, description of goods or services, etc. Calculate Tax on Advance received and pay tax while filing the return for the month. The advance received should be grossed up. This me ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
