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.

AI Summary

Manufacturing Company Seeks Clarity on GST for Export Advances; Exports Zero-Rated, Refunds Available for Paid GST A manufacturing company inquires about the Goods and Services Tax (GST) implications on advances received from foreign customers for export orders. They seek clarification on whether GST should be included in advances and how it affects invoicing. Responses indicate that exports are zero-rated under GST, meaning no GST is payable. However, if GST is paid, a refund can be claimed. Options include using a Bond or Letter of Undertaking (LUT) to avoid IGST on exports. The discussion confirms that GST is not applicable to exports, and refunds are available for any GST paid.