TaxTMI 
TaxTMI 
Tax on Advancein the case of contractor
X X X X Extracts X X X X
X X X X Extracts X X X X
....ax on Advancein the case of contractor <br> Query (Issue) Started By: - VENU K Dated:- 1-8-2025 Goods and Services Tax - GST <br> Got 7 Replies <br> GST<br> <br> An audit is happening in the case of a contractor. In audit the only issue is that they have not paid GST on advance received. They have properly paid taxes and reported the bills as and when they were raised in their monthly return....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. Basically they were not aware of the need to pay tax on advances received in case of services. The department is now saying that for each advance received, they have to pay full tax along with interest. They are not willing to consider the tax paid at the time of raising bills. Our submission is that only interest needs to be paid for delay and no tax can be demanded. To take an example Advance....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1,00,000/- received in April Invoice given in March and tax paid on 1,00,000 in June. The departments stand is Tax of Rs. 18,000/- plus interest till the date of payment after audit plus penalty should be paid. No credit will be given for Tax paid in June. We can claim it as refund if available. is this stand justified? --Reply By: Sadanand Bulbule The Reply: In terms of Section 13 of the CGST....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Act, tax is to be paid immediately on advances received by the taxpayer engaged in the supply of services. In the present case, admittedly there is delay of such payment of tax, which attracts only interest under Section 50[1] of the Act. There is no provision under the CGST Act to demand tax on tax already paid belatedly. --Reply By: VENU K The Reply: There is a typographical error in the que....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stion.... Invoice given in June and reported properly in GSTR 1 and 3B and tax was also paid apropriately. --Reply By: KASTURI SETHI The Reply: This is all verbal. The departments view is totally incorrect. Let the Audit Team issue Audit Memo indicating the basis of demanding tax again. Advance itself is not a consideration without supply of service. Even demanding inter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....est can be challenged. --Reply By: VENU K The Reply: Thank you Sadanand Sir,Kasturi Sir for your valuable opinion. --Reply By: Amit Agrawal The Reply: Section 2(31) of the CGST Act, 2017 is worth noting, in the context of query raised and same reads as under: (31) "consideration" in relation to the supply of goods or services or both includes-- (a) any payment made or to be made, w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or serv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ices or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; These are ex facie views of m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ine and the same should not be construed as professional advice / suggestion or recommendation. --Reply By: Shilpi Jain The Reply: Only interest should be applicable. Though also chk if you have any ITC balances available at the time you received advances. This could lessen any interest burden. Bring out on record clearly the fact that tax was paid though belatedly. --Reply By: VENU K The Rep....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly: Thank you Silpi Mam and Amit ji . Thank you experts for giving me the much needed clarity. <br>***<br> Discussion Forum - Knowledge Sharing....