GST on advance received and subsequently the advance is returned

[SARAVANAN RENGACHARY]

Please suggest:

GST is paid on the advance received from Customer.

Subsequently, Customer has cancelled the order and asking us to refund the advance paid. Goods also not supplied.

Please suggest how to adjust the GST paid on advance amount.

Saravanan.

[Rajagopalan Ranganathan]

Sir,

According to Section 31 (d) & (e) of CGST Act, 2017

"a registered person shall, on receipt of advance payment with respect to any supply of goods or services or both, issue a receipt voucher or any other document, containing such particulars as may be prescribed, evidencing receipt of such payment.

where, on receipt of advance payment with respect to any supply of goods or services or both the registered person issues a receipt voucher, but subsequently no supply is made and no tax invoice is issued in pursuance thereof, the said registered person may issue to the person who had made the payment, a refund voucher against such payment."

Rule 50 of CGST Rules, 2017 prescribes the details to be contained in receipt voucher.

[KASTURI SETHI]

I support the views of Sh.Ranganathan Sir.

[SARAVANAN RENGACHARY]

Sir,

Thanks for your time and reply.

We can refund the advance back to the customer thru refund voucher. I seek the clarification / guidance for "How to get the tax back from government which was already paid on receipt of advance".

Saravanan.

[Rajagopalan Ranganathan]

Sir,

You have to file a refund claim in appropriate form.

[DR.MARIAPPAN GOVINDARAJAN]

In my view on filing return GSTR 3 you may get refund at that time.

[Ganeshan Kalyani]

One to one correlation is not required to claim input tax credit. Hence the tax paid on advance can be adjusted against GST payable on your outward supplies.

[subramanian vijayakumar]

Experts comments are good

I endorsed the views of Ganesan kalyanji

AI Summary

GST on advance payments: refund voucher and refund claim or adjustment against outward GST liability permitted. A registered person receiving an advance must issue a receipt voucher and, where no supply follows and no tax invoice is issued, may issue a refund voucher to the payer. Tax charged on the advance can be recovered by filing a refund claim in the prescribed form or by adjusting the tax paid against GST payable in the periodic return; input tax credit correlation is not strictly required for such adjustment.