GST for differed (after commissioning & acceptance etc) payment.

[MohanLal tiwari]

GST is payable on advances received from customers, what is provision for GST where part payment (5% or 10%) is payable after three / six months of receipt & acceptance of goods and balance 10% or 20% payment after successful installation & commissioning or performance of equipment.

[Rajagopalan Ranganathan]

Sir,

According to Section 31 (5) of CGST Act, 2017-

Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply of services,––

(a) where the due date of payment is ascertainable from the contract, the invoice shall be issued on or before the due date of payment;

(b) where the due date of payment is not ascertainable from the contract, the invoice shall be issued before or at the time when the supplier of service receives the payment;

(c) where the payment is linked to the completion of an event, the invoice shall be issued on or before the date of completion of that event.

Clause (d) of sub-section (3) of Section 31 of CGST Act, 2017 stipulates that-

a registered person shall, on receipt of advance payment with respect to any supply of goods or services or both, issue a receipt voucher or any other document, containing such particulars as may be prescribed, evidencing receipt of such payment.

Therefore according to the above provisions you have to issue the invoice in your case.

[MohanLal tiwari]

Mr Rajgopalan Sir,

Your reply to above query is for services " Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply of services, whereas in our case, we are supplying goods (machinery parts) and payment terms is say - 10% advance against ABG after order acceptance, 70% against receipt of mtls by consignee, 10% against PBG after 6 months of receipt of goods, balance & final 10% against PBG after successful installation and trial of equipment.

In the sub-section 4 & 5 of the Rule also not applies correctly as it is not continuous supply.

[Rajagopalan Ranganathan]

Sir,

As per proviso to Section 31 (1) of CGST Act, 2017 "the Government may, on the recommendations of the Council, by notification, specify the categories of goods or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be prescribed." However necessary rules are yet to be notified. We have to wait for the Notification.

[Ganeshan Kalyani]

I agree with the views of Sri Rajagopalan Sir. Thanks.

[MohanLal tiwari]

Dear Rajgopalan Sir,

Please advise forum through whom we should take up this issue for necessary notification. We are badly suffering with loss of interest on account of payment of duty & tax at the time of removal of goods and getting payment after even 2 to 5 years.

[Ganeshan Kalyani]

You may approach your industry association.

AI Summary

GST on deferred payments: tax liability arises on advances and invoices must be issued as per CGST timing rules. GST applies on receipt of advances and on invoicing for deferred payments; suppliers must issue a receipt voucher when advance is received and a tax invoice according to statutory timing rules, while recognizing that continuous supply timing provisions may not govern discrete goods contracts with milestone payments, and that enabling notifications prescribing invoice timing were not yet issued.