In GST, When the time of supply occurs taxpayers is required to pay GST.

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.

Initially in each small amount of advance receipts, taxpayer is required to pay GST. Such provision was created more complication for the small businesses, but according to need and for the sake of simplification,  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. First of all Central Government gives relief to only some GST taxpayers, but later Central Government again 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 and not on Any Advances received towards Goods.

          But such relief is not granted to supply of services. It means any advance amount received towards supply of services will definitely attract GST. Taxpayers supplying their services need to be confirming for such compliance. And pay the GST according to time of supply.

-CA Monika Rathi