No GST on Advance received in case of Supply of Goods

The term SUPPLY is the cornerstone of the GST Law. Tax is chargeable under GST only if there is Supply of Goods or Services. However the liability to pay GST arises only when the taxable event i.e. SUPPLY occurs, which is determined by Time of Supply as per Sections 12 to 14 of the GST Act. Section 12 deals with Time of Supply of Goods and Section 13 deals with Time of Supply of Services.

As per Section 12 of the GST Act, 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 sub-section (1) of 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.

Thus GST on Supply of Goods was payable at time of receipt of advance, if the amount is received before issue of invoice. This provision was creating complications for Businesses in general and small enterprises in particular. To remove the complexities and with a move towards simplification, the Central Government issued Notification No. 40/2017 – Central Tax, dated 13/10/2017, giving relief to small businesses. As per this Notification, Registered Persons (other than composition dealers) whose turnover during last FY was less than 1.5 crore, are not required to pay GST on outward supply of goods, at time of receipt of advance.

Giving further relief the Central Government issued Notification No. 66/2017 – Central Tax, dated 15/11/2017, and extended the benefit to all taxable persons (other than Composition dealers). Now all taxable persons are required to pay GST on outward supply of Goods at time of issue of invoice or the last date on which they are required to issue the Invoice.

Implications of the recent changes

1.       GST will not be payable at time of receipt of advance in case of outward supply of goods by registered persons having turnover less than 1.50 Crore during last FY, w.e.f. 13^th October 2017. However GST on advance is payable if advance received during period 01/07/2017 to 12/10/2017.

2.       In case of Persons having turnover more than 1.50 crore during last FY, GST is payable on advance received on outward supply of Goods, if advance is received during the period 01/07/2017 to 14/11/2017. No GST is payable on advance if it is received on or after 15/11/2017.

3.       This relief is not available on outward supply of services. GST is payable on advance received in case of outward supply of services.

4.       This relief is not available if tax is payable on reverse charge. In case of reverse charge, GST will be payable at time of payment, if payment is made before receipt of goods 

New functionalities made available on #GST Portal

Following new functionalities have been made available to taxpayer on GST Portal:

GSTR-2 Offline Version 2.1 - New version of GSTR-2 offline tool is available on portal now. This will enable taxpayers to export data of GSTR-2 from Tool to Excel. This will be helpful in comparing this data with purchase register to take actions like accept, reject and modify.

Form GST CMP-02 - Intimation to pay tax under Section 10 (Composition Levy) under Rule 3(2) of CGST Rules, to be furnished by the person for opting to pay tax under Composition Levy, (Refer Notification No. 45/2017 Central Tax Dated 13/10/2017 issued by CBEC).

Form GST CMP-03 - Intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised. Now this form can be filed electronically on GST portal by 30th November 2017, by virtue of Order No. 5/2017-GST Dated 28/10/2017 issued by CBEC.

Form GST ITC-04 – Quarterly Statement to be furnished by taxpayer having details of Goods/capital goods sent to job worker and received back.

Form GST REG-29 – Application for cancellation of provisional registration by the migrated taxpayer, who is not liable for registration under GST. Taxpayer can Login with credentials, click on link “Cancellation of Provisional Registration” at the Dashboard (under view profile), mention reason, sign and Submit. The cancellation will be effective from appointed date.

Form GST PMT-07 - “PMT-07 Grievance for payment”, application for intimating discrepancy relating to payment is available on Portal. This functionality is meant for the taxpayer to raise grievance when the amount is debited from his account, but their Electronic Credit Ledger is not updated.

SOURCE: GSTN