Advance from customers, Goods and Services Tax - GST

[MohanLal tiwari]

Sir,

We are manufacturer of tailor made castings / machinery parts meant for a particular customer for their specific use. We are generally taking mobilization advance against Advance Bank Guarantee from our customers to ensure they will take ordered materials after their readiness. If they cancel order or do not take materials, it will be just scrap for us.

from 1st July'17 onward, GST will be payable on such advance as per rate applicable for goods, kindly advise for :-

1. Whether we should charge GST in our Proforma Invoice for advance payment.

2. Whether Buyer is legally bound to pay GST alongwith advance payment.

3. Whether the GST paid at the time of advance will be adjusted in proportionate to advance being adjusted against each supply.

4. Whether ITC will be available immediately after payment of GST.

5. How the transaction will reflect in GST R-1 & GST R-2.

6. How the accounting will be done for such advance payment of GST.

Posts / Replies

[Himansu Sha]

In my view taking ITC is doubtful. The condition as prescribed under sec. 16 is receipt of goods which is satisfied in the instant case.I would like comments of other experts for enhancing my knowledge

[Himansu Sha]

Receipt vouchers issued during advance can be adjusted if goods are not supplied.

[KASTURI SETHI]

Point-wise my views are as under:-

1.No. 2.No 3.Yes. 4. No. because advance payment of GST is subject to final payment at the time of issuance of invoice/completion of service. 5. Read Column 12 of GSTR.1 Accounting is not my field.

[Himansu Sha]

Just an amendment to my reply. Conditions of sec. 16 is not satisfied when goods are not received or deemed to be received