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GST on Advances
Greetings to our clients.
 
Government removes requirement of payment of GST on advances received for supply of goods.
 
November 20, 2017
 
CBEC has issued Notification Nos. 55-66/2017-Central Tax, Circular no. 16/16/2017-GST, 17/17/2017-GST and order no. 9-10/2017-GST, all dated 15 November, 2017 giving effect to the changes announced in the 23rd GST Council Meeting.
 
Extract from Notification No.66/2017
 
Registered person who did not opt for composition scheme are not required to pay GST in respect of supply of goods on receipt of advance. GST will be payable only at the time of invoicing. Earlier, the waiver from paying tax on advance was made available to a registered person having annual turnover upto one crore fifty lakh rupees.
 
Comments by the author:
 
  1. The GST Law provides for payment of GST at the time of receipt of advances towards supply of goods and services.
 
  1. First, Notification No. 40/2017-Central Tax dated 13th October, 2017 was issued to remove the requirement of payment of GST on advance receipts towards supply of goods, for persons having turnover of less than Rs. 1.5 Crore in a year.
 
  1. Vide Notification No. 66/2017- Central Tax dated 15 November, 2017, this relaxation has been extended to all persons, except persons opting to pay GST under composition scheme.
 
  1. It should be bear in mind that this relaxation is applicable only from 15th November 2017 and only for supply of goods.
 
  1. The obligation to collect GST on advance received by the service provider shall continue, the treatment in case of composite supply will depend on the principal supply.
 
 
 
 
In nutshell:
 
  1. GST not to be collected on advance received for supply of goods.
     
  2. GST on advances is applicable for persons opting to pay GST under Composition Scheme.
 
  1. GST to be collected on advance received for supply of services.
 
 
 
The author is an associate member of the Institute of Chartered Accountants of India and a practising Chartered Accountant based in Papanasam and can be reached at vijaysarathisha@gmail.com.
 
  • : The contents of this document are solely for informational purpose. It does not constitute any professional advice or a formal recommendation. The author does not accept any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document or for any actions taken in reliance thereon. No part of this document should be distributed or copied without express written permission of the author.

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