I have a case where customer pays advance payment against service provided. And I have to pay GST against this advance payment without creating sales invoice.
How do I record this transaction and book in ledger?
Thanks in advance.
Please take advice of a tax professional. But, as far as I understand, the payment of an advance does not constitute a supply event and is hence not taxable. It is only when you raise an invoice for your goods or service that GST will be assessed. So you don’t need to pay GST when you receive an advance.
Thanks @jai_kejriwal for your reply.
As per the GST rule, it is company’s liability to pay GST against advance received (but not billed) from the customer for future supply of service/goods.
But I couldn’t be find out the way to book GST against advance payment against service.
Pls refer: the govt. document on GST for Advance Receipts:
https://www.cbic.gov.in/resources//htdocs-cbec/gst/51_GST_Flyer_Chapter6.pdf;jsessionid=DA852A1644A54972C10BBDA73327984F
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.
I will get in touch with our CA and ask how we deal with this situation. I will revert here.