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

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.