Advance Received

[Kamdev Senapati]

Advance received one year back from one scrap merchant and the same has reflected on our books of accounts. Regular basis the scrap merchant taken the scrap and paid the amount of each sales.

My Quarry is Since the advance received before GST, will GST attract for the same or not ??.

Please suggest...

[KASTURI SETHI]

Here is a question of point of taxation. In this case point of taxation will be the date of invoice and now it is obvious that time of supply of goods will be after 1.7.2017. So GST is attracted.

[MUKUND THAKKAR]

what ever amount you have received one year back ,it seems that it was "DEPOSIT" not advance. so please change the head in your books of account as a DEPOSIT not as advance. and DEPOSIT is not attract GST. only advance covered under GST.

[KASTURI SETHI]

Excellent advice by Sh.Mukund Thakkar, an expert. As a precautionary measure, also see if there is any agreement regarding advance or deposit.

AI Summary

Point of taxation determines GST liability where time of supply occurs after implementation for pre-implementation receipts.
Point of taxation governs GST on pre-implementation receipts: if the time of supply, as determined by invoice and point-of-taxation rules, occurs after GST commencement, the earlier receipt is subject to GST. Alternatively, if the earlier receipt is properly characterised and evidenced as a deposit rather than an advance for supply, it may not attract GST; examination of agreements and accounting classification is necessary.