Impact of GST on advance payments
Advance Payment GST:
According to the revised model of GST law, the time of Supply of goods and services should be earliest of date of issue of invoice and receipt of payment done advance. If in situations where the recipient of goods and services which made by advance payment gst as in terms to the supplier, the taxation is liable to be paid on such advance according to the informed GST implementation. If anyone made a payment in advance tax before the time of Supply of goods and services, will have to pay GST on it as well. For example: if any individual has ordered for buying raw materials for furniture of 5 crore and gave advance of 4 crore, then he/she have to pay GST on that advance payment to the supplier.
There are contradictions on charging section 8 where levy is on supply. There are unending questions unanswered like after advance payment supply which doesn’t happen for any reasons like natural calamities or disputes and more, than what happens to the GST already paid on advance payment.Charging GST on advance payment is a new concept for the taxpayers also diametrically opposite to the law provision by the Honorable supreme Court in case of collector of central excise. The GST levied on the supply to keep track of advance received or invoices maintenance will create administrative supporting accounts not to hassle mend by the taxpayers. Government will anyway not earn any extra revenue by the measure except receiving some small part of revenue in advance which can be later used in hue for the citizens. But this entails lot of extra documentation on the part if suppliers.
Again we come to a conclusion where the suppliers or business promised to grow comes to a break or stop when the requirements curtain the GST law model. Industry, firms and other small businesses have to think twice before taking any orders for supply. As the GST law model I’m a way constraints the growth rhythm they thought of as the implementation proceeds. However, somewhere in between the lines, the user friendly trait of GST law and function deems on as the following instructions are somewhat is considered confused. GST law model provides point of taxation rules which determine the point at which the taxes will be paid. But, the tax paid on the basis of advance payment received against a future supply of goods and/or services then there as certain clauses to be kept in mind. Such as GSTN/name of the customer, state code, amount received, tax amount and such.