GST on advance from customer

[Kaustubh Karandikar]

XYZ (India) received advance from a customer from Russia towards supply of goods to Russia, but the contract got cancelled due to Russia – Ukraine war and therefore the advance was shown as other income in the books of accounts since not refunded to the customer. Whether XYZ is required to pay GST on it?

[Amit Agrawal]

NO, in my humble view, presuming that advance was so received in convertible foreign exchange in India.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

There would be no liability as the time of supply has not attracted

[Padmanathan KV]

I agree with the views of the experts. No GST shall be liable to be paid on the amount as supply has not fructified.

AI Summary

GST Not Applicable on Advance Received in Convertible Foreign Exchange for Canceled Contract Due to Russia-Ukraine War XYZ (India) received an advance from a Russian customer for goods, but the contract was canceled due to the Russia-Ukraine war. The advance was recorded as other income since it was not refunded. The question was whether GST is applicable on this amount. Three respondents agreed that GST is not required because the supply did not occur, and the advance was received in convertible foreign exchange. They emphasized that the time of supply was not triggered, and thus no GST liability arises.