GST on Advance Payment Received
Provisions in GST relating to Taxation of Advance Payments for Goods or Services
In terms of section 12 (Time of Supply of Goods) & Section 13 (Time of Supply of Services) of the Revised Model GST Law, , time of supply of goods or services shall be earliest of
- date of issue of invoice or
- receipt of payment.
Thus, in situations where the recipient of goods/ services makes an advance payment as per payment terms to the supplier, the tax is liable to be paid on such advance payment.
Accordingly, the service provider should remit the applicable taxes on such advances in the month in which the money is received even where the services are not supplied / provided