Time of Supply: Advance Receipts under GST

Time of Supply: Advance Receipts under GST

Advance Receipts under GST

Determination of time of supply of advance receipts under GST can create confusion as it neither involves removal of goods/ rendering of service, nor the issue of the invoice.

If anyone paid advance tax before the time of supply of goods or services, will have to pay GST on it as well. Example, if a person has ordered for buying stationery of Rs. 5 Lakhs and gave advance of Rs. 3 Lakhs, then he/she have to pay GST on that advance payment to the supplier.

Time of supply consist of 3 rules as follows:

  • Rule 1 : 21 days rule
  • Rule 2 : 21 days delivery order
  • Rule 3 : Advance payment/invoice

Time of supply for advance receipts (payment/invoice) is the payment received and/or tax invoice issued, whichever is earlier.

Process of time of supply of advance receipts

  1. At the time of receiving advance, supplier will have to give the Receipt voucher. The receipt voucher should contain:

  • Name of supplier,
  • Address,
  • GST number,
  • unique alphanumeric receipt voucher number of less than 16 characters,
  • date of issue,
  • name of the person who gave advance,
  • his/her address,
  • GST number,
  • description of goods or services,
  • amount of advance,
  • rate of GST,
  • amount of GST, and
  • Signature of supplier, at the time of filing of GST return the details of such receipts are to be mentioned in the return.

  1. Supplier have to prepare a tax invoice after supplying of goods/ services and deduct the amount of advance received from it. GST will be charged on the remaining amount. For Example, If a supplier supplied stationery of Rs. 5 Lakhs and have already received an advance of Rs. 3 Lakhs before 3 months,then he/she have to charge GST on remaining amount of Rs. 2 Lakhs in the tax invoice also. He/she should mention the information about Advance already received in tax invoice.
  2. After giving the advance to the supplier, the buyer will not get the credit of GST. Whenever, supplier supplies goods or services and gives the tax invoice to the receiver then only he/she gets credit of GST. Example If ‘A’ gives Rs. 10 Lakhs as advance on 5th July to “B” for buying machinery of Rs. 15 Lakhs and 1 Lakh GST is chargeable on Rs. 10 lakhs. On 10th October, ‘B’ supplies the Machinery and in tax invoice mentions Rs. 15 Lakhs as cost and will charge GST of Rs. 50,000/- on the remaining payment of Rs. 5 Lakhs. Then ‘A’ will get credit of Rs. 1.5 Lakh.
  3. If the rate is not determine at the time of  advances, then GST should be chargeable at 18%.

 Above provisions shows that, tax is payable even if the advance payment is made against any supply. Even, if the recipient has not received goods/services or the supplier has not supplied goods/services yet.

  • Supplier has to pay tax and need to mention it in the statement of outward supplies.
  • When the supply is deliver to the recipient and final invoice is issued, after that recipient can claim ITC.


Because, of these provisions both the supplier and the receiver has to keep the proper books of accounts . Every small or large business will have to pay attention on maintaining the record and must comply with the law.

In case you are confused about GST as a business owner, feel free to consult the GST experts at LegalRaasta. You can get comprehensive assistance on GST Registration and GST Return Filing. You can also use ouGST software for doing end-to-end GST compliance.



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