adjust of advance and gst against the bill

[Ramakrishnan Seshadri]

We are going to construct one factory.

For this we have awarded the contract to one construction company.

We have paid advance and gst to them.

Now they have given their first bill after after adjusting the 50% advance and 50% gst on this bill.

Whether this correct or not?

Details as below in example:-

Total contract value : 100 crores

Advance 30% : 30 crores +GST 5.4 crores

Bill submitted for 25%on contract value :25 crores +4.5 crores

They have adjusted 50% of the advance and gst paid in their first bill submitted.ie.: 15 crores +GST :2.7 crores

The balance 50% advance will be adjusted in the next bill.

Could you please suggest whether this correct and what is the law says.

Please give your opinion with cgst section and rule.

Thanks & Regards,

S.Ramakrishnan.

[Nash Industries I Pvt Ltd]

Tax Insights from India Tax & Regulatory Services www.pwc.in

Government removes requirement of payment of GST on advances received for supply of goods and allows manual filing of refund applications

November 16, 2017.

Regards

S.Ramaswamy

[ANITA BHADRA]

Notification No. 40/2017 – Central Tax, dated 13/10/2017, -. As per this Notification, Registered Persons (other than composition dealers) whose turnover during last FY was less than 1.5 crore, are not required to pay GST on outward supply of goods, at time of receipt of advance.

Notification No. 66/2017 – Central Tax, dated 15/11/2017, extended the benefit to all taxable persons (other than Composition dealers).

This relief is not available on outward supply of services. GST is payable on advance received in case of outward supply of services.

Construction Company providing SERVICES to you . They need to pay GST on received of advance itself.

In my view , GST on Advance can not be kept pending for adjustment in their subsequent bills

[Ganeshan Kalyani]

GST is applicable on receipt of advance toward service. The supplier of service shall pay tax on advance received and adjust that tax paid against the invoice he will raise in future.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Ms. Anita

AI Summary

Construction Company Must Pay GST on Advance Payments Immediately, Not Defer, per GST Regulations A query was raised regarding the adjustment of advance payments and GST against a construction bill. A company paid a 30% advance plus GST for a factory construction contract and received a bill for 25% of the contract value. The construction company adjusted 50% of the advance and GST in this bill, planning to adjust the remaining in the next bill. Responses indicated that GST on advance payments for services must be paid upon receipt, not deferred for future adjustments, as per GST regulations. The consensus was that the construction company should have paid GST on the advance immediately.