Advance from foreign customer

[MohanLal tiwari]

Dear Sir/s,

We are manufacturing tailor made items and taking 20% or 30% advance against Bank Guarantee from customers (including foreign customers) for raw materials procurement. Our Queries are as under :-

1. Whether we should claim advance including proportionate GST and pay GST on receipt of advance against Receipt Voucher.

2. Whether GST will be payable against advances received from foreign buyers also against export orders.

3. Since invoicing is done and advance is adjusted in proportionate to quantity supplied, whether advance will also be adjusted accordingly from each supply invoices.

[Kishan Barai]

There is "0" GST on Export of Goods. GST are zero rated on exports if you prepare the bill of Export, you need to show 20% Advance & 80% via LC in it bill amount would be 100% without charging any GST.

More over you will get ITC on GST for raw materials / domestic purchase ment for Exports

[MohanLal tiwari]

Dear Mr Barai,

For Export GST is "0" rated but if someone is opting to pay IGST and getting refund ?

[Kishan Barai]

Yea , you can get refund of IGST paid after filing or shipping bill, there is also provision for purchasing via Bond / LUT to source goods without payment of IGST

[KASTURI SETHI]

I support the views of Sh.Kishan Barai, an expert.

[Kishan Barai]

Thank You Very Much Sir, you are really great. 

[Ganeshan Kalyani]

Yes, export is zero rated i.e. no GST is liable to be pay on export. However, there is option of payment of GST while export and the exporter can claim refund of the IGST paid on export. Thanks.

AI Summary

Zero-rated exports: advances from foreign buyers are not subject to GST, with option to pay IGST and seek refund.
Advances from foreign buyers for export orders are treated as part of the export value and are zero-rated for GST (no tax charged on the bill of export), with advances adjusted proportionately against supply invoices; exporters retain entitlement to input tax credit on domestic inputs. Alternatively, exporters may pay IGST and seek refund after shipping, or export under Bond/LUT to avoid IGST payment.