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.

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.