Applicability of GST on payment prior to dispatch of goods

[MohanLal tiwari]

Dear Panelist,

We are supplying few of our goods with payment terms 'prior to dispatch' and immediately on receipt of payment material is dispatched on same day or within 2-3 days.

Please advise whether this payment prior to supply of goods should be considered as advance and required Receipt Voucher is to be issued or it can be taken payment against supply and GST should be charged in supply invoice.

AI Summary

GST on Pre-Dispatch Payments: Advance or Against Supply? Section 12(2)(b) of CGST Act Explored. A discussion on the applicability of GST on payments made prior to the dispatch of goods raised questions about whether such payments should be treated as advances requiring a Receipt Voucher or as payments against supply. According to Section 12(2)(b) of the CGST Act, GST liability arises upon receipt of payment. If the payment and supply occur within the same month, GST is payable on the supply. However, if the payment is made in one month and supply in the next, GST applies to the advance. The consensus suggests issuing a Receipt Voucher if requested by the customer.