GST ITC Eligibility in Barter Arrangement - Invoice Raised Before Receipt of Services

[Piyush Choudhary]

Dear Experts,

We are engaged in the trading of Plastic products and have entered into a reciprocal (barter) agreement with a media agency wherein we supply our products to the agency and in return, the agency provides advertisement/media services.

Some more Facts of the case:

1. We supplied goods to the service provider in November 2025 and discharged GST accordingly.

2. As per the agreement, advertisement services are to be provided over a period based on mutual execution (campaigns, media releases, etc.).

3. As on date (March 2026), no advertisement services have actually been executed or received, nor have any specific media slots or campaigns been finalized.

4. However, the service provider is proposing to raise an invoice in March 2026 for the agreed value of services.

Query:

1. Whether ITC can be availed based on such invoice in March 2026, even though services have not been actually received or executed [Sec 16(2)(b)]?

2. Can this arrangement be treated as a case where "right to receive service" is created, thereby allowing ITC (similar to prepaid services like software licenses or pre-booked advertisement slots)?

3. Does the absence of specific deliverables (such as confirmed media slots, campaign schedule, etc.) impact the eligibility of ITC?

4. Whether raising of invoice before actual execution of services is in line with Section 31 read with Section 13 of the CGST Act?

In an agreement, it is mentioned that all individual transactions are to be executed through separate deal letters / purchase orders.
Request your expert guidance on the above.

AI Summary

Input tax credit in barter arrangements turns on receipt of services, not merely advance invoicing or contractual entitlement.
GST input tax credit in a barter arrangement for future advertisement services was discussed with reference to the statutory condition of receipt of services under section 16(2)(b). The facts involved supply of goods already made and tax discharged, while no campaigns, media slots, or other deliverables had yet been finalised, though an invoice was proposed in advance. The commentary examined whether a contractual right to receive services, advance invoicing, and the time-of-supply provisions under sections 13 and 31 could support ITC despite the absence of actual receipt and defined deliverables.