Applicability of GST on advances from foreign buyer

[MohanLal tiwari]

Please advise for applicability of GST on advance payment from foreign buyers. Please consider that we are charging IGST in our Export Invoice while exporting the goods.

[RAMESH PRAJAPATI]

Exports are classified as zero rated supply. So GST is not required to be paid on advances. At time of export you can clear goods on payment of IGST or without payment of IGST. It is your choice. There is no revenue loss to the Government.

[MohanLal tiwari]

Thanks Mr Rajput. Do we need to issue Advance Receipt Voucher for advance from foreign buyers.

[Rajagopalan Ranganathan]

Sir,

Rule 50 of CGST Rules, 2017 indicates that -

A receipt voucher referred to in clause (d) of sub-section (3) of section 31 shall contain the following particulars, namely,-

(a) name, address and Goods and Services Tax Identification Number of the supplier;

(b) a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special charactershyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year;

(c) date of its issue;

(d) name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient;

(e) description of goods or services;

(f) amount of advance taken;

(g) rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);

(h) amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess);

(i) place of supply along with the name of State and its code, in case of a supply in the course of inter-State trade or commerce;

(j) whether the tax is payable on reverse charge basis; and

(k) signature or digital signature of the supplier or his authorised representative:

Provided that where at the time of receipt of advance,-

(i) the rate of tax is not determinable, the tax shall be paid at the rate of eighteen per cent.;

(ii) the nature of supply is not determinable, the same shall be treated as inter-State supply.

This rule does not talk about export of goods. Therefore in my opinion you need not issue receipt voucher in respect of advance received from foreign buyer.

[KASTURI SETHI]

Having no GST implications, it is your option whether to issue or not. Barring GST aspect, for maintaining proper books of account, receipt voucher for advance should be issued. In the long run, it is in your interest.

[KASTURI SETHI]

Re-analysed the issue as well as all replies (including mine) Advance Receipt Voucher is required to be issued as per GST law. There is no harm in doing so. One should not take the risk of procedural lapse unnecessarily.

AI Summary

Zero rated supply: GST not payable on advances from foreign buyers; issue advance receipt voucher to avoid procedural lapse. Advances from foreign buyers for export are not subject to GST where the supply is a zero rated supply; exporters may choose to clear goods with or without payment of IGST. Receipt vouchers under the CGST Rules must record prescribed particulars including supplier and recipient details, amount of advance, tax particulars and place of supply; practitioners recommend issuing advance receipt vouchers for foreign advances to ensure proper accounting and avoid procedural lapse.