GST – GST Law and Procedure – 006 – Chapter Six GST on advances received for future supplies Time of supply determines when the taxpayer is required to discharge tax on particular supply. Time of supply provisions are governed by Section 12 to 14 of the CGST Act, 2017. As per the said provisions, the time of supply is determined with reference to the time when the supplier receives payment with respect to the supply as well as a few other references like issue of invoice, receipt of goods etc. In general, the time of supply is earliest of issuance of invoice or receipt of payment. Therefore, in case of advance received for any supply, time of supply 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. A
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s of goods who have not opted for composition scheme, have been exempted from the burden of paying GST on Advances received. For such categories of taxpayers, time of supply would arise only at the time of issue of invoice and they need to discharge GST liability accordingly. But the supplier of services are required to pay GST at the time of receipt of advances. Many of the goods which were in the highest tax bracket of 28% have been brought down to the 5/12/18% bracket after the decision of the GST Council in its meeting held on 10.11.2017. Notification no. 41/2017-Central Tax (Rate) dated 14.11.2017 has also been issued giving effect to the revised rates. It may so happen that advances were given when the rate was 28% and the supplier has paid tax on it. Subsequently the rate has been reduced to say 18%. Now, assuming supply happened after the change in tax rate and the invoice for the same was also issued after the change in tax rate, the time of supply, according to section 14 of
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ash 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) description of goods or services; f) amount of advance taken; g) rate of tax (central tax, State tax, integrated tax, 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 ad
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person issues a receipt voucher, but subsequently no supply is made and no tax invoice is issued in pursuance thereof, the said registered person may issue to the person who had made the payment, a refund voucher against such payment; The refund voucher shall be as per Rule 51 of the Rules ibid and shall contain following particulars: a) name, address and Goods and Services Tax Identification Number of the supplier; b) a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters hyphen 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
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ted in earlier tax periods against invoices issued in the current tax period. The details of information relating to advances would be submitted in Table 11A only if the invoice has not been issued in the same tax period in which the advance was received. Whereas adjustments made in respect of advances received during the earlier tax period, but invoices issued in the current tax period would be reflected in Table 11B. It may be noted that dates for FORM GSTR-2 and FORM GSTR-3 have not been notified so far. GST on advance received by Composition dealer: A Composition dealer is governed by Section 10 of the Act ibid which states as under: 10. (1) Notwithstanding anything to the contrary contained in this Act but subject to the provisions 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 presc
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escribed rate is applied on the turnover in the state of the composition dealer. Turnover in a state has been defined in Section 2(112) of the Act ibid as turnover in State or turnover in Union territory means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis) and exempt supplies made within a State or Union territory by a taxable person, exports of goods or services or both and inter-State supplies of goods or services or both made from the State or Union territory by the said taxable person but excludes central tax, State tax, Union territory. In Table 6 of the GSTR-4, the return for composition taxpayer, the tax on outward supplies made shall be computed as net of advance and goods returned. Further, in Table 8, consolidated statement of Advances paid/Advance adjusted on account of receipt of supply need to be detailed. A combined reading of the above provisions would indicate that a compos
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