Einvoice - Aggregate Turnover - Advance

[KSA Associates]

XYZ ltd sales for the year is 4.5cr. Apart from this, they have received the advance of Rs 60,00,000. Kindly guide whether E-invoicing is applicable in this case.

In nutshell, while calculating Aggregate turnover, whether advance should also be included??

[KASTURI SETHI]

An advance amount is subject to final adjustment. Advance  amount itself is not consideration. It takes the form of consideration only at the time of  final adjustment  i.e. at the time  issuance of invoice. 

Hence in my view, answer is NO.

[Sadanand Bulbule]

I endorse the reply of Sh. Sethi Sir.

[YAGAY andSUN]

We duly endorse the views of our Experts and share our inputs in support of the aforesaid views of our experts.

The Queries is asking a very relevant question regarding aggregate turnover and the applicability of E-invoicing under the Goods and Services Tax (GST) law in India. Let’s break this down using the legal framework under GST.

✅ 1. Legal Basis for E-Invoicing Applicability

Under Rule 48(4) of the CGST Rules, e-invoicing is mandatory for registered persons whose aggregate turnover in any preceding financial year from 2017-18 onwards exceeds the prescribed threshold (currently ₹5 crore w.e.f. 1 August 2023).

🔹 Aggregate turnover is defined under Section 2(6) of the CGST Act, and it includes:

"the aggregate value of all taxable supplies (excluding inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same PAN, to be computed on all India basis and excludes central tax, State tax, Union territory tax, integrated tax and cess."

✅ 2. Treatment of Advances in Aggregate Turnover

This is the core of your query. Let’s examine two things:

a) Is Advance Taxable?

Under Section 13 of the CGST Act, time of supply of services can be triggered either by invoice or receipt of payment, whichever is earlier. So, advance receipts for services are subject to GST at the time of receipt, unless specifically exempted.

For goods, as per Notification No. 66/2017 – Central Tax, GST is not payable on advances received for supply of goods (except for composition taxpayers).

b) Does Advance Form Part of Aggregate Turnover?

This is where clarity is needed:

Advance itself is not a "supply" until adjusted, and in some cases, GST is not even paid on receipt (e.g., for goods). However, aggregate turnover includes the value of "supplies", not “receipts”.

Therefore, advances unadjusted against actual supplies should not be included in aggregate turnover because they are not yet taxable supplies. Once the advance is adjusted against a taxable supply (and invoice is issued), it becomes part of the turnover at that point.

📌 Key Interpretation:

Advance does not qualify as turnover until an actual supply (supported by an invoice) occurs.

✅ Conclusion on E-invoicing Applicability in XYZ Ltd’s Case

Sales for the year = ₹4.5 Cr (actual supplies).

Advance = ₹60 lakhs (yet to be adjusted; not invoiced yet).

Aggregate turnover = ₹4.5 Cr, assuming no other supplies exist.

📌 Therefore, e-invoicing is not applicable, as aggregate turnover does not exceed ₹5 Cr.

🔍 Your View is Legally Sound

You are correct in asserting:

"Advance amount itself is not consideration. It takes the form of consideration only at the time of final adjustment i.e., issuance of invoice."

This aligns with the definition of “consideration” and aggregate turnover under the GST Act.

***

[KASTURI SETHI]

M/s.Yagay and Sun and Sh.Sadanand Bulbule, Sirs,

A stamp of approval on my reply by both of  you keeps  my  interest alive in this forum.

[Shilpi Jain]

If the 60L advance is in respect of supply of services then that will be added to the aggregate turnover since GST is payable on advance in case of services.

If this advance is in respect of supply of goods then it need not be considered for aggregate turnover.

[Ganeshan Kalyani]

I agree with the view of the experts.

AI Summary

E-Invoicing Under GST: Advance Receipts and Turnover Calculation Clarified for Businesses Below 5 Crore Threshold A discussion forum explores the applicability of e-invoicing under GST regulations for a company with annual sales of 4.5 crore and an advance receipt of 60 lakhs. Experts collectively conclude that advances are not automatically included in aggregate turnover calculations. The determination depends on the nature of supply (goods or services) and whether the advance has been adjusted against an actual invoice. In this specific case, e-invoicing is not mandatory as the aggregate turnover remains below the 5 crore threshold.