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GST on Advance PaymentPresent Government is keen to roll out GST from of 1st July, 2017, GST council has finalised most of the acts, rules, returns and formats related to GST, CGST, IGST, UGST. Out of few complicated provisions one proviso is GST on advance payment received by supplier from vendor. Business community is very confused that how to tackle this GST on advance payment transaction. If it becomes so complicated, an assessee instead of focusing on its business, has worry on compliance of complicated tax wherein non-compliance may lead to harsh provisions for penalty and even prosecution.

GST provision to decide the timing of supply of goods under GST. Timing of supply of goods assumes importance in knowing when to pay the tax liability. As per the GST law, the earliest of the following, GST has to be discharged on supply of goods:

  1. Date of supply of goods or Date on which goods are made available
  2. Date of invoice for supply of goods
  3. Receipt of advance payment towards such supply
  4. Entry of such supplies in the books of recipient

Let’s understand this with example:

Say, Vendor paid advance before the supply of goods or services will have to pay GST on it. at the time of receiving advance, Supplier will have to give the Receipt voucher. The receipt voucher should mention Name of supplier, Address, GSTIN, Unique receipt voucher number, Date of issue, Name of the person who gave advance, Vendor address, Vendor GST number, Description of goods or services, Amount of advance, HSN/SAC Code, Rate of GST, Amount of GST, and signature of supplier (Digital or Manual).

At the time of filing of GST return the details of such receipts are to be mentioned in the return. (At present scenario when vendor pay advance to supplier, that also includes excise, vat and related taxes but there is no provision of payment or adjustment of such taxes received or issue separate tax voucher or keep track of all taxes received in advance)

If a person has given an order for buying commodity amounting to Rs. 20 Lakhs and gave advance of Rs. 10 Lakhs. The vendor will issue receipt voucher mentioning CGST and SGST tax along with basic amount (Using Reverse Tax Calculation formula i.e Rs.10,00,000/118×100= Rs. 8,47,458 Basic and 9% on it will be CGST and 9% of Basic will be SGST)
(Assume that CGST @9% and SGST @9%)

Accouting Entry (1st Entry) :

Dr/Cr Account Head Rs. Rs.
Dr Bank Account 10,00,000
Cr. Advance Against Sales Order 8,47,458
Cr. CGST on Advance Payment-Liability 76,271
Cr. SGST on Advance Payment-Liability 76,271

Scenario while generating Tax Invoice:

When Supplier prepare a tax invoice after supplying of goods or services will deduct the amount of advance received (Basic + GST) from it and will charge GST on remaining amount. Supplier must mention the information about Advance payment received in tax invoice.

In above case study Total Invoice Amount will be Rs. 20, 00,000/- (Basic Rs. 1694915 + CGST Rs. 152542 + SGST Rs. 152542/-), Advance received will be deducted from each head like… (Refer below Table)

DetailsTotalBasic ValueCGSTSGST
Invoice Value20,00,0001694915152542152542
Less: Advance Received10,00,0008474587627176271

Accounting Entry (2nd Entry) :

Sales Invoice Generated:

Dr/Cr Account Head Rs. Rs.
Dr Customer Account 20,00,000  
Cr. Sales Account   16,94,916
Cr. CGST on Output-Liability   1,52,542
Cr. SGST on Output-Liability   1,52,542

Accounting Entry (3rd Entry) :

Advance received adjusted against Sales Invoice:

Dr/Cr Account Head Rs. Rs.
Dr Advance Against Sales Order 8,47,458  
Dr. CGST on Advance Payment-Liability  76,271
Dr. SGST on Advance Payment-Liability  76,271
Cr. Customer Account   10,00,000

Points to be Noted:

  • The buyer of the goods or services will not get GST credit on advance payment, he is eligible to get GST credit (Full GST amount ) only when supplier supplies the goods or services and issue tax invoice to buyer.
  • If supplier is not sure about GST rate while taking advance payment he may apply GST @ 18%.
  • In GST regime both the vendor and supplier must have to keep proper records while making and receiving advance payment against supplies. So, avoid payment of double taxation.

Following complications involved in compliance of GST on Advance payment :

  • Reversal of advance payment on Cancellation of order
  • Dispute with vendor
  • Management of huge volume of customers with advances
  • Short supply of materials
  • Huge Turn key project having non-performance clause
  • Linking of advance payment received with supplies of materials
  • Cash discount on Advance payment

Disclaimer: The entire contents of this article is solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation.. It doesn’t constitute professional advice or a formal recommendation. The author has undertook utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify & confirm  from the genuine sources before acting on any of the information’s provided herein above. 

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97 thoughts on “Accounting Treatment of GST on Advance Payment

  1. sanjay says:

    I have booked one under construction property by loan 1200000 and 8 % gst(96000) taken the loan of 1080000.
    I had payed 876000
    But due to some issues i want to cancelled the property.
    Builder told me GST will be deducted 96000.
    It is correct or not.
    Please share your comment

    1. Nikhil Dhol says:

      Builder must repaid GST to you, as you are not going to buying the product,
      Builder can reverse the same & take credit


    If we forget to reverse, deposited advance GST, then how we can adjust it. Can we adjust it with another one in different month, kindly advice

    1. Santosh Verma says:

      absolutely, you can adjust advance payment with any invoice subject to Same GST #.

  3. Damodar says:

    Our Business Background

    We are a new startup which has been registered for providing commission based marketplace for connecting students and teachers. The students would be able to take choice of courses which have been offered by various teachers. The teachers are not on our payroll and we are just offering the platform for a commission fee from the teachers based on number of classes the teachers conduct on our platform

    Note that we are not live yet but trying to implement GST in our system and hence this query

    Example on our business model and charging (Concept)

    Teacher charges:

    There is a teacher who is registered on our platform who charges 100 rupees per class.
    She posts for a tuition package of 10 classes which she can take for the students. We show this package on the platform and the customer buys it

    Customer charges:

    Customer Charge – 100*10 sessions = 1000 rupees + 18% GST = 1000 + 180 = 1180
    We would like to collect the payment of 1180 and keep it with us instead of releasing it directly to the teacher
    Reason – if there is a cancellation from the student then we have to return part of the money back(with GST) to the student for the the sessions student didn’t attend
    Reason – we also want to guarantee that teachers dont run away with the students money hence we want to make payment to teachers only based on sessions conducted by the teachers

    our commission charges:

    Since we dont own the service, the invoice would be generated in the name of the vendor on our platform
    We pay the teacher based on the number of classes conducted per month.
    Assume for simplicity our commission is 30% and on that we charge 18% of GST to the vendor on the commission collected.
    We would raise an invoice for commission

    Teachers payment: only based on the number of sessions conducted

    Per session rate from teacher is 100 and GST rate per session is 18 rupees (18% of 100 rupees)
    If the teacher has completed 3 sessions this month the teacher gets the following
    Base amount – 100 – 30% as commission – 18% GST on commission = 100-30-5.4 = 64.6 rupees per session. So for 3 sessions its 193.8
    GST amount from customer to be passed to vendor – 18 Rupees * 3 sessions = 54 Rupees
    Total payment made to the teacher for Month 1 (3 Sessions) = 193.8+54= 247.8 Rupees
    Payment on Customer Cancellation
    Since we have only released payment to the teacher for the 3 classes conducted, we will be able to refund the money of remaining 7 classes back to the customer
    Money refunded = 7*100 +18%GST = 700+126=826 rupees

    Questions on GST

    Question 1 : Can we collect the GST payment from the customer of 180 rupees in this example and have it passed in installments to the vendor based on the actual service / sessions the vendor is providing to the customer. If there is a cancellation we will be able to give the remaining money back to the customer with GST as its with us.

    Question 2 : If not than in Case you advise that we need to have the entire GST (Rs.180)paid to the vendor as the vendor can pay the government, then if there is a cancellation by the customer, the vendor would have paid extra GST to the government. How can that be claimed back from the government. For us as middleman though, to give the GST portion of the refund back to the customer, we would have to ask vendor the money back is my understanding.

    Any response on this query will help us immensely.

  4. DEV says:


  5. Vishal says:

    No you cannot. Only when the supplier raises an invoice to you at the time of actual supply will you be entitled to claim ITC to the extent of CGST/SGST charged by him in that invoice, irrespective of the quantum of advance previously paid to the supplier.
    However, the supplier on the other hand has to pay the CGST & SGST on the entire sum of advance paid by you if he has not billed you or supplied you the goods/services in the same month as the receipt of adavance.

  6. Vishal Khatri says:

    Can i take ITC on advance Payment made for supply of goods in future? Note: Invoice will received with goods

    1. Suresh Chauhan says:

      No you can’t take ITC on advance payment as you supplier will issue a ” receipt voucher” not Tax Invoice.

  7. Chhaya says:

    Hi, what are the accounting entries in the books of the customer who is making the advance payment to supplier of services?

  8. HITESH says:

    please advise me
    we have received advance payment in Aug-2017 for Rs. 100000/- (including GST 78125 + 21875 ) this time GST Rate is our product 28% but after 15th December GST Rate reduced for 28% to 18%. we raised sales invoice 01.01.2018 of total amount Rs. 100000 (84745 basic + gst 15255) hence how to balance GST (21875-15255) =6620 ADJUSTED

    1. Dharmesh Patel says:

      Adjust GST amount to the extent of GST charged in invoice only. balance amount will be lying in your Cash ledger account. As at present GST on advance payment is removed except for Service provider.

  9. Rajendra Kulkarni says:

    Pls advice on following…
    We have paid advance to supplier centrally from Mumbai on proforma invoice with GST. The vendor has delivered goods at Mumbai, Chennai, Delhi and Gurgaon and issued separate tax invoices. But my finance/tax team is insisting for one tax invoice from Mumbai to knock off the advance payment.
    How do I close this?

    1. Vineet Gandhi says:

      Single invoice from Mumbai is not possible as supplier has sent goods at your different business places from Mumbai with IGST,which have each separate GST reg. You adjust your advance payment by segregating single payment to diff Branches or godown.

  10. Rajas Arvind Bobade says:

    I work as a finance consultant with various bank’s, i have receive payment in advance and invoice get generated almost after one month i don’t mind paying GST on receipt of payment but invoice is not available how can I tackle this?

    1. Sabuj Matre says:

      You have to pay gst on advance payment along with interest from the month of advance payment received to till the date it it irrelavante to whenever you generate invoice and adjust against advance payment received.

  11. A. N Singh says:

    We are in the field of executing Salt Washery Plants,Coal Handling Plants or any Material Handling Plants on EPC basis i.e conception stage -to design- procurement – manufacturing at others factory – supply to site- erection at site- testing and Commissioning – hand over to client. we have been awarded a project of 1000 lakh with a payment terms of 10% advance against ABG. Due to GST law we have to give ABG of118 Lakh in stead of 100 Lakh in earlier tax regime. This is a big hurdle and blocks capital . This has been removed from Goods. Why not from Services? Most urgent to be removed from services also. Finance Minister PL DO SOME THING URGENTLY

    1. Priyank Patel says:

      Yes Sir you are right
      Hope that Gov will understand pain of Service Industries and take action.

  12. Ashutosh says:

    if material sale to party 29.11.17 rs. 1000000.00 and amt received 30.11.17 from party rs. 1010000.00 then rest amt. treat in advance

    1. ANIL PANCHAL says:

      Dear Ashutosh

      You are right Rs. 10000/- will be treated as an Advance payment against future supply of goods otherwise it will be treated as excess amount received and refund the said amount.
      Latest update is that GST council has removed the provision of GST on advance payment on supply of Goods but it still remain on supply of services.

      1. SAP FI says:

        can you please let us know what is treatment of advance on supply of services. Please reply with illustration.

        Thanks in advance

  13. Goverdhan Dahiya says:

    Suppose that I am paying Rs.100000/- to my subcontractor as an advance inclusive of TDS @ 1% than how I take entry in books of accounts with GST impact. Kindly reply with illustration

    1. Dhananjay Shah says:

      When goods or receiver paying advance amount to vendor then no gst is applicable to payer, and
      now govt has removed gst on advance payment , so relex.

  14. Biswajit says:

    My Landlord has raised an invoice of my Office Rent, as for example on 30.09.17, whether I have also to make payment of that particular Invoice within or on 30.09.17 or I can show in GST and make payment after due date or any time whenever payment will be made actually. Please suggest me. Thanks

  15. Ashok Bhanushali says:

    Thanks Sir,
    I was searching how to calculate GST on advance payment while payment is inclusive of GST amount. I found your site and I got my answer.
    Mr. Muniraj HC
    You had calculated wrong amount of Basic that is Rs. 976563/- not Rs. 973437.50, where as your tax amount @28% is correct i.e. Rs. 273427/-.

  16. Muniraj HC says:

    I received advance of Rs.12,50,000 in the month of Aug 2017. I split this amount into Taxable value and GST @ 28%.
    Taxable value – 9,73,437.50
    GST@28% – 2,73,437.50
    But in summary sheet total value is different. Any reason?. How to overcome this problem

  17. Ankit Goyal says:

    Thanks for the Article, please help me in the below scenario.

    I am a trader and purchase goods against orders from the company.

    I take an order of 10L + 18% GST with 100% Advance, delivery next month.
    I order the material to the company in 9L + 18% GST paying 100% advance.
    Now as I can understand, I am paying 18% GST to the company, which will be my input and also paying 18% on the Advance received from the customer.
    I am ending up paying double GST on the same order.
    Please clarify.

    1. Krupali Naik says:

      We can’t say double GST, but it is cash blockage situation.
      Our Govt say pay tax first then do business….

      1. Ankit Goyal says:

        Thanks for your reply.

        GST on Advance has to be paid separately or can be adjusted with the ITC I have, treating it just like a supply.

        1. Krupali Naik says:

          No, you have to pay GST on Advance payment received from Customer if Invoice is Generated in Next Month, If you generate invoice in same month of payment received there is no GST liability arise. You can adjust GST on Advance payment against when you Generate Invoice, so, there is no question of ITC.

          1. Sourav Sharma says:

            what about when order cancelled and payment should be refund to customer.

          2. Mohan Desai says:

            If order cancelled then you have to reverse the advance payment entry with gst and get refund or setoff.

  18. Sudhanshu says:

    I have a advance payment on date 20-9-2017′ but I will get tax invoice and also supply the goods next month. So please tell me will I eligible to cliam the input in next month or not

    1. ANIL PANCHAL says:

      You can’t take credit of GST paid on advance, But you have to set off gst , when you generate Tax Invoice. Be careful otherwise possibility of double taxation on same invoice is there.

      1. gobi says:

        I already add the details of advance amount in gstr 3b august at ITC column. how can correct it. but yet we cannot receive materials.

  19. Arpit says:

    Thanks for the detailed information about Accounting Treatment of GST on Advance Payment.
    I have a query..
    1) If contract is cancelled and EMD or advance need to be refund to buyer in next month. Then what will be GST treatment as per taxation and Accounting.
    2) If contract is cancelled after mutually decided market rate.. and get some profit over cancellation of contract due to market favor..shall i need to pay GST over settlement profit.

    1. Mithun Bhattachariya says:

      1. If contract is cancelled and EMD or Advance need to be refund – Reverse GST liability and take credit of GST paid on Advance payment made earlier.
      2. GST is applicable on settlement profit – First you reverse Advance payment received and reverse the tax paid on it, after that raise a proper invoice for settlement profit with GST and pay accordingly.

  20. pk says:

    This query is pertaining to hotel room booking:

    As a hotel advanced received from guest in 15july when a booking by the guest for 31st December ? GST Department say if the bill not generate with in 60 days from date of advance receive, the Advance Paid GST is lapsed how is possible guest will pay GST twice in a bill.

    1. Mohan Desai says:

      Now Relex

      Turnover upto Rs. 1.5 cr supplier or dealer is not required to pay GST on advance payment received as per recommendation made in 22nd meeting of GST council on 6th Oct,2017

  21. BIPLAB PAUL says:

    My question: I am a GST registered businessman (say A) . I have purchased goods complying all the GST formalities from a registered business man (say B). B has declared in his GST invoice that the payment should be made in favour of another registered businessman (say C).

    In other words B has declared in his GST invoice that ‘please pay the invoice value by at par cheque / DD to C’

    Is it possible? If not why? Is there any guideline announced by the GST council in the regard.

    Please Help.

  22. Edwin Fernandes says:

    This query is pertaining to hotel room booking:

    As a hotel how can I get refund for the GST paid of the advanced received when a booking is cancelled later by the guest? And is there any other rule or process to handle this situation.

    The case is – Booking is for September but the advance was paid in July by the guest, GST for the advance was paid in August, Cancellation of room booking is made in September.

  23. Ipshita Verma says:

    How the concept will work when Advance is paid to an unregistered party from an registered party ?

  24. Siddhesh Kulkarni says:

    If customer is giving payment in 3 installations say out of 25000- 10,10 and 5 thousand respectively. For the first two instalments towards advance- I will be filling Tax liability (Advance received)-11A-1,11A-2. While accepting the third and final instalment of Rs.5000, I will be issuing total tax invoice Rs.29500 (25000+18%GST) to the customer. Now let me know which of the GST format, I am required to fill up to conclude the total invoice amount?

  25. Siddhesh Kulkarni says:

    I am Service provider to manufacturing industries. (Providing ISO/IATF certification consultancy). I have taken advance from customer on 15/7/17 and I have register with GST on 24/8/17. I have found no option on GST portal to submit gst return on advance of July. Is it ok to pay full GST on total invoice value (advance + remaining taxable value of invoice) in September month with issue of invoice dating in september?

  26. neeraj says:

    i am into exports of auto spare parts and old used vintage scooters my question is if we received advance payment of say 100000 how much gst i will have to pay. do we charge this from our overseas buyer?.

  27. Vikash says:

    How much amount suppose to pay in advance ??

  28. Vikash says:

    We received payment from customer 50 Lacs. in July-17. 25 Lacs supplied in July-17. means we have 25 Lacs advance balance from customer.
    and in Aug-17 also supplied 25 Lacs means against 50 Lacs we already supplied till 20th Aug.

    now what is GST liabilities for advance of 25 Lacs.
    my simple query is advance amount 25lacs how much amount we will pay as GST.

    1. Sanjay Barot says:

      GST liability created jul-17 when full advance payment received. We assume that your advance payment date and supply dates are different. Due to no clarity from CBEC we have to pay GST on advance payment even though invoice generated in same month. In general when ever customer pay advance it includes all applicable taxes. In your case Rs. 50 lacs includes GST also. you have to pay GST in advance later on it will adjusted ag invoices in respective months.

  29. kamal chopra says:

    I have received an advance of Rs. 2360000/- (Basic Rs. 20,00,000/-+GST 3,60,000/-) in the month of July . It means i have to deposit tax of Rs. 3, 60,000/- at the time of receiving advance in the month of July. now for this supply i have procure material in the month of August and i have a Input of Rs. 3,00,000/-. and i have made a supply to customer in the month of September.now i have a input credit of Rs. 3,00,000/- and i have already deposited Rs. 3,60,000/-. it means 6,60,000/- tax was deposited including input credit. it means double tax was deposited. in this situation whether i can get refund and within which time please clarify. it seems double deposit of taxes.



    1. Suman Prajapati says:

      Yes Sir
      It seems double taxation or excess tax paid on one supply.

  30. Vishal Prasad says:

    Hi, could you please advise what should be done if advance is received from a customer prior to implementation of GST i.e., 01/7/17. For e.g.. A customer had paid 200000/- in advance through NEFT in Apr’17 & thereafter every month some services are supplied to him. In the month of July ’17 also some supplies are made and on 31/7/17 there is still an amount of ₹.100000/- still standing to his credit in my books. Do I have to pay tax against the advance amount of ₹.100000/-.
    If so, what would be the accounting entry for the same.
    Thanks, in anticipation

    1. Manu P says:


      Here, you no need to pay GST on advance payment, as in your case time of payment is not covered in GST regime, you have pay GST on invoice, as it is time of supply under GST regime.
      Accounting Entry for advance – it was already booked
      for Sales – As usual Sales entry with applicable GST rates.

  31. Asim Gupta says:

    I have recd order for goods worth Rs 10 lakhs + 18% IGST i.e. total Rs 11.80 lakhs. Advance 30% is payable i.e. Rs 3.00 lakhs. My question is
    (a) Whether I can claim Rs 3.00 + 18% IGST = Rs Rs 3.54 from the customer or whether the GST portion of Rs 0.54 lakhs must go out of my pocket only?
    (b) what document should I issue to the customer for receiving advance (either Rs 3.00 or Rs 3.54 lakhs)…only Receipt Voucher?
    (c) Supplies shall be completed in 6/7 months in instalments.

  32. dear Sir,
    we have received Advance against export order amount of 500 lac.

    we are making supply against LUT.

    can we pay gst on advance receipt.


    raj kishore

    1. Dear Sir,
      we have received Advance against export order amount of 100 lac.
      we are making supply against rebate claim.
      can we pay gst on advance receipt.

      raj kishore

    2. Hemul Rathod says:

      No gst applicable when you export goods under LUT

  33. pushkar says:

    If the material supplied in partial despatch that time how to show advances on multiple tax invoices ?

    1. Hemul Rathod says:

      You have pay GST on residual amount and adjust subsequently

  34. KAMAL says:

    sir advance received against the High Seas sales are subject to gst , as in case of exports , you don’t need to pay gst , will the same principle will apply in this case . as on sale of material , the supply is exempt from GST.

  35. Manoj Kumar says:

    I get an advance of Rs 1.0 L from one customer and do not create liability at the time of advance accounting, instead we bill (large number of bills) and create GST liability @ of 18% on leftover Credit Balance in Customer Account at month end and reverse it at month beginning.

    Is this process ok.

    Manoj Kumar

  36. Sourav Sharma says:

    very informative post . thanks .
    but i have some queries as under ..
    1.customer paid advance and we have deposited gst as applicable and there after customer cancelled the order and want his money back .what will be the treatment.
    how much amount will refund to customer ?
    2.in some case gst cess is applicable ,what treatment will done on advance receipt .

    1. Anil Panchal says:

      On cancellation of order by customer, you have to repay amount net of GST paid, and reverse the GST liability, Because when you received an advance payment you had already paid GST ,receipt voucher generate and your customer had taken credit of GST on an advance payment on the basis of Receipt Voucher. So you have to reverse an advance payment net of GST.

      1. Sourav Sharma says:

        what will do if customer is unregistered. if we pay him net of gst ,how customer will get the gst amount.he will claim from us of government.

  37. pratik dixit says:

    if we raise invoice in the same month in which we have received advance do we need to raise a advance voucher?

    1. Anil Panchal says:

      Each and every payment received as an advance against goods have to raise an advance voucher and tax liability start from that day.

  38. Sanjay kumar singhal says:

    If I make a payment of 20 Lacs and receive goods worth Rs 1900000 lacs only than what to do

    1. Santoshkumar says:

      GST is only applicable to Advance payment receipt, not on advance payment.

  39. devendra dholakia says:

    In the Tax Invoice where is the advance received to be shown/adjusted??
    Which of the following two is appropriate?
    (Taxable Value+GST on Taxable Value=Total Amount -Advance Received-GST on Advance)
    (Value of Supply –Advance Received-GST on Advance=Taxable Value + GST on Taxable Value

    1. Gopal says:

      I think 1st method of showing advance against sale invoice is better.You can track record and buyer easily understand that.

  40. kailash mundra says:

    It was nicely explain for advance collected and GST adjusted but i have one query here. Suppose i get advance of RS 500000/- i done all necessary entry and discharge the liability. But as per Invoice rule we need to mention Advance receipt number on invoice raised against that advance received. Now the query is that how to keep the track for the advance received getting zero at which level of invoice means how system will identify that Advance amount is becoming zero. and till which bill number is have to mention Advance receipt number on invoice. Is there any automatic solution or do we need to keep manual track of the same.
    Thanks and Regards
    Kailash Mundra

    1. Sunita Mohan says:

      Your solution is you must use tally software, there your problem will be solved.

  41. Prerana Golechha says:

    Hello Expert,

    We receive lot of advances from our customers; Say we receive 2 lakhs against 1 particular order and pay GST in one tax period. But the order gets cancelled.

    How do I treat the GST paid against the cancelled order while returning the money to my customer? (considering I shall have no more transactions with the customer)

    1. CA Dharmesh Vyas says:

      Dear Madam
      You must have to repay advance received against cancelled order and reverse GST by issue payment voucher to Customer and reduce your GST liability.

      1. Sunil Bakshi says:

        No, The question here is that: we have deposited GST. How to recover that?

  42. , if subsequent invoice is in next month, system clear the GST liability posted in previous month. In this case, GST payable GL has open item which is in second month.
    1. How we will pay GST on advance while filing return for previous month?.
    Also, during advance receipt, we don’t know the tax rate and amount of the material to be sold, so we are should show our highest rate of liability which is 18%
    But while invoicing, we may sell 5% rated item also. Here the status is extra GST paid.
    2. How this GST can show as receivable and set-off with other payable?

  43. Farhat Fatima says:

    Hi Expert,
    if subsequent invoice is in next month, system clear the GST liability posted in previous month. In this case, GST payable GL has open item which is in second month.
    1. How we will pay GST on advance while filing return for previous month?.
    Also, during advance receipt, we don’t know the tax rate and amount of the material to be sold, so we are should show our highest rate of liability which is 18%
    But while invoicing, we may sell 5% rated item also. Here the status is extra GST paid.
    2. How this GST can show as receivable and set-off with other payable?

  44. Hemant Aswani says:

    Advance payment made to suppliers outside India against Imports will also attract gst or not. Pls clarify

    1. Shashank says:


      GST is to be paid by Receiver of Advance payment , and not by payer. Hence GST on advance payment for imports , does not come into picture.

  45. Hemant Aswani says:

    Information provided is very useful, have a question on the same that if a vendor makes advance payment of rs 10000 on 10 July and gets supply of goods of rs 20000 on 25 July, still do we have to record different enrties of advance payment and invoice, as both the transactions were done in the same month and liability to pay tax would be on same date

  46. Anurag Bhanot says:

    Is GST is to be deposited in the same month against advance received,say I received advance on 31/7/17 then I have to deposit in the same month is there is any time period ?

    1. Sushant Karbhari says:

      In the above scenario, you will have to deposit the Tax on advance by the 20th of Next Month.

  47. Tushar says:

    Your article is very informative and is also useful. But can you please clarify below situations in case of Pure Agent
    1st Situation
    Advance received Rs. 10 Lakhs.
    Final Invoice raised in subsequent month Pure Reimbursement Rs. 10 Lakhs
    Agency Fees Rs. 3 Lakhs + GST

    2nd situation
    Advance received Rs. 10 Lakhs.
    Final Invoice raised in subsequent month Pure Reimbursement Rs. 7 Lakhs
    Agency Fees Rs. 2 Lakhs + GST

    Advance received is generally towards Reimbursements. In such cases GST provisions will apply?


  48. Rakesh Bikk says:

    advance paid rs.20/- against the order value of 50/-. For 20/- receipt voucher is raised. My query is when goods are supplied and tax invoice is raised, In the tax invoice what we have to show ( 30/- + GST ) or ( 50/- + GST ) along with .

    1. ANIL PANCHAL says:

      Its depend that if your order is inclusive of GST than tax invoice must be Rs. 42 + GST or only Basic value than Rs. 50 + GST

  49. Harmeet says:

    Thanks for the informative article. Do we need to mention item wise details in Advance Receipt? If yes, then while creating an invoice, can we change those items?


  50. Shashank says:

    What is definition of Advance Payment ? If i have Rs 10000 credit in customer account after current supply , do we have to treat it as advance ?

    Is there any limit about amount ? We receive advance payment for supply, and there can be extra credit of Rs 50 or 100 left in the account. Technically this is not advance for next order, but it will be adjusted in next order. How do we handle this ?

    1. Mehul Patel says:

      1. In GST excess credit balance will be treated as Advance Payment. In that case you may refund excess amount or adjust excess amount against future supply. But if your excess amount carry forward next month you must have to pay GST and issue receipt voucher.
      2.There is no limit about amount. Small residual amount you may write off.

  51. gaurav says:

    But what would be the treatment if bill is raised in subsequent month .
    There it wud be double taxation . for eg

    Amt recd in july as advance

    bank dr
    to advance recd from client
    to cgst on advance
    to sgst on advance

    now on 10 th august the client discharges its tax liability

    cgst on advance dr
    sgst on adv dr
    to bank

    now if service is supplied after 2m and invoice is raised what wud be the entries for it

    adv from client dr
    to sales
    to cgst output
    to sgst output

    here it attracts double taxation

    pls clarify

    1. Mehul Patel says:

      There is no double taxation
      Note that when you generate invoice your must have to adjust your discharged tax liability paid on advance receipts, like mentioned in above article.

      Details Total Basic Value CGST SGST
      Invoice Value 20,00,000 1694915 152542 152542
      Less: Advance Received 10,00,000 847458 76271 76271
      Dues 10,00,000 847458 76271 76271

  52. Dhanesh Lohar says:

    Very Nice article

    Your article has remove doubts…. even though there is one query in my mind

    Suppose advance payment received before 1st July, 2017 what accounting treatment should be and does GST applicable in that case.

  53. Akash says:

    I suppose there is a clarification issued by the government on this. Are you aware of any such thing? If so could you please share the clarification issued, a link would be very helpful. Thanks.

    1. Admin says:

      There is no such guidelines issued by the Govt. We will notify when ever such information is available

      1. Akash says:

        If you could see the answer of my Balachandar Natarajan here – https://answers.sap.com/questions/175033/gst-india-gst-tax-on-advance-receipt-from-customer.html, he says there is a clarification and he went on to explain its contents. That recast the doubts in my minds. Please keep us updated. Thanks.

  54. Gopi says:

    Tax portion of Advance amount is calculated on reverse working basis is understandable, but is it that even in the invoice value the tax portion is calculated on reverse working, if the purchase value is 20lacs, wont gst be on 20 lacs? (Since u have mentioned the sale value=20lacs)

    1. ANIL PANCHAL says:

      Thanks for your query
      Reverse calculation working is advisable only on advance payment, Since there is no need to apply reverse tax calculation formula while invoice generating,tax will be calculated only on basic value which will be already available with you.
      In above example invoice value is Rs. 20 Lakh which inclusive of GST. ((Basic-16,94,916 + GST (152542+152542))

  55. poorvi says:

    if the purchase order against which advance is received contain more one goods and all having different GST rate .than how we determine for which good advance is received ?and which rate of GST is applicable on such advance payment ?

    1. Santosh Vaghmare says:

      If supplier is not sure about GST rate while taking advance payment he may apply GST @ 18% and Subsequently while raising invoice he can adjusted against invoice.

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