GST on Advance received from Customer

[GOPAL CHOWDHURY]

Dear all,

As Ministry has issued Notification No.66/2017-CT dated.15.11.2017 and I have seen here it was issued granting exemption for GST on advances received by the tax payers on goods not on service who not availed for composition scheme.

In this regard can any one kindly clarify me the Notification as I still can't understand is the notification issued for the tax payers to charge the rate of tax changed on certain commondity which comes into effect from the date of issue of the Notification as the provision regarding billing on the same is provided U/s 14 of the CGST Act, 2017 as provided under the Notification or else its allowing exemption from payment of tax on advances received by the tax payers.

Kindly let me know.

[Ganeshan Kalyani]

No. 66/2017 - Dated: 15-11-2017 - CGST Seeks to exempt all taxpayers from payment of tax on advances received in case of supply of goods

[Ganeshan Kalyani]

Relaxation from payment of GST on advances received shall be restricted only for supply of goods. Advance received for supply of services shall continue to be taxable.

Further, issue of advance receipt voucher/ refund voucher shall still continue for goods as well as services, irrespective of aforesaid clarification.

[Ganeshan Kalyani]

No GST on advance received against supply of goods wef 15/11/17.

[GOPAL CHOWDHURY]

Dear Ganesh Ji,

Thanx to let me know the clarification of the Notification no.66/2017-CT.

In this regard as directed in the notification, I want to adduce something on the same, the notification empowered those tax payers who hasn't opted Sec.10 of the CGST Act, 2017 and they can pay tax on supply as specified in caluse (a) of Sub-section (2) of section 12 of the said act.

The provision of this clause is as follows:

"The date of issue of invoice by the supplier or the last date on which he is required, under sub-section (1) of section 31, to issue the invoice with respect to the supply" or

(b)...

Provided sub-section (1) of section 31 states as follows:

"(i) A registered person supplying taxable goods shall, before ot at the time of,-

(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or

(b)delivery of goods or making available thereof to the recipient, in any other case,

issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars as may be prescribed:

Provided that the Govt may, on the recommendation of the council, by notification, specify the categories of goods or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be prescribed:

Further the aforesaid notification also refer section 14 which prescribed the rate of tax applicable on the change in rate of tax in respect of supply of goods or services.

So from the provision of the notification above in my understanding it provides for the invoicing of tax invoices of 177 items which rate of tax has been changed on 23rd meeting of the GST council. As notification has been passed in this regard the new rates has been notified so those who has taken advances in this regard or supplied goods and payment is yet to be received, what rate will be applicable was provided under section 14.

Further the provision of sections referred under the aforesaid notification not amended clause (d) of sub section (3) of section 31 of CGST Act,2017, which provides regarding the treatment of advance received by the supplies of goods. No further notification comes out amending the clause of this sub section.

So, in my view from the discussion above the Notification will only applicable for the change on rates of goods on 23rd meeting of GST council and not related for the common practice which is still following under the clause of sub section of section 31 as referred by me above.

If I am wrong in understanding the notification, kindly let me know with relevant provisions in this regard as no such news comes out from CBEC or GST council that they exempt all the advances from GST yet.

Please let me know. THANKS.

[Ganeshan Kalyani]

Sri Gopal Sir, Notification 66/2017-CT states that the registered person (other than composition dealer) shall pay the central tax on the outward supply of goods at the time of supply as specified in clause (a) of sub-section (2) of section 12 of the said Act including in the situations ...

Section 12 provides for time of supply which provides for the time for payment of tax. Section 12 (2)(a) provides that time of supply shall be the date of issue of invoice by the supplier or the last date on which he is required, under sub-section (1) of section 31, to issue the invoice with respect to the supply.

From the above it clarifies that a registered person shall pay tax only when the invoice is issued or the last date on which he is required to issue the invoice. Thus, it implies that tax is not required to be paid on receipt of advance from the customer.

[CSSANJAY MALHOTRA]

Sh Ganeshan ji,

I could have reverted on same but was waiting for your final comments which are exactly the same as I thought of.

No need to interfere in your well placed reply. Acceptance / Rejection is always with the querist.

[Ganeshan Kalyani]

Sri Sanjay Sir, thanks for your complement.

[GOPAL CHOWDHURY]

Dear Sirs,

Thanks for your valuable opinions in this regard.

Further, I am also in the view but I have searched everywhere no such press release is there which states that all supplies done by the registered person who hasn't opted section 10 is not required to pay GST on advances received by them, neither any clarification comes in this regard in the notification itself.

Whereas on the same date amendment in rates of 177 items comes out, so I was awaited for the clarification, views or press release in this regard, because if we advice any company to do so and on later date if department come out with there views "where it is amended that exemption is provided on all supplies etc etc", So I raised this query to know your valuable opinion.

As the notification no.66/2017-CT hasn't specify that it is applicable on those goods which rates where amended w.e.f 15.11.2017, we can go by this view that it is applicable on all supplies, but whereas as said by me in my previous post that clause (d) of sub section (3) of section 31 is not get amended so that part I miss somewhere to co-relate.

Well thanks all the expects once again for your opinion I got some clarity on my doubts and hope as per the clarification above we can say as the notification hasn't clarify in which regard it is applicable, so it is applicable on all supplies done by the registered person not opted section 10.

Hope my contest is ok in this regard.

[Ganeshan Kalyani]

Sri Gopal Sir, law is not straight forward some time. We need to interpret it appropriately. Here, in this notification if you carefully go through the section you will understand the intend of the Notification . Thanks.

[Guest]

Advance received on supply of goods is not taxable, this notification comes under CGST Act not in IGST, why so?

AI Summary

GST on advances: suppliers of goods (non-composition) taxed at invoicing time, not on receipt. Notification No.66/2017-CT exempts registered persons (other than composition dealers) from payment of central tax on advances received for the supply of goods, while advances for services remain taxable. The notification refers to the time of supply under section 12(2)(a), so tax is payable on the date of invoice or the last date for issuing an invoice under section 31(1), not upon receipt of advance; advance receipt and refund voucher formalities continue.