GST Applicability in Advance Received on Supply of Services
As per Section 13 of the Central Goods and Service Tax Act 2017, the liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of this section. The time of supply of services shall be the earliest of the following dates, namely:
(a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under section 31 or the date of receipt of payment, whichever is earlier; or
(b) the date of provision of service, if the invoice is not issued within the period prescribed under section 31 or the date of receipt of payment, whichever is earlier; or
(c) the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not apply:
The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section. The time of supply of goods shall be the earlier of the following dates, namely:
(a) the date of issue of invoice by the supplier or the last date on which he is required, under section 31, to issue the invoice with respect to the supply; or
(b) the date on which the supplier receives the payment with respect to the supply:(Now the date of receipt of payment not relevant due to Notification No. 66/2017 – Central Tax dated 15.11.2017 Seeks to exempt all taxpayers other than Composition Scheme from payment of tax on advances received in case of supply of goods.).
The Government has come out with regard to GST on advances Notification no. 66/2017 dated 15.11.2017, whereby all suppliers of goods who have not opted for composition scheme, have been exempted from the burden of paying GST on advances received in case of supply of goods. For such categories of taxpayers, time of supply would arise only at the time of issue of invoice and they need to discharge GST liability accordingly. But the supplier of services are required to pay GST at the time of receipt of advances.
