GST on Advance Payments

Nikhil6813 Jun, 2025Finance

GST on Advance Payments refers to the liability that arises when a business receives payment before supplying goods or services. Under GST law, tax is payable on advances received for services, but not typically for goods, unless specifically notified. When an advance is received, the supplier must issue a receipt voucher and pay GST at the applicable rate. This ensures timely tax compliance, even before the actual delivery. Upon completion of supply, the advance is adjusted in the final invoice. Proper documentation and timely tax payment are crucial to avoid penalties and interest.