Payment of GST on advances received :
Receiving advance from customers is common. However, GST is proposed to be payable when advance is received, even if supply of goods and services is to be made at a later stage. This will throw the business out of gear and compliance costs will increase, since when advance is received, receipt voucher is required to be issued for payment of tax. This has to be adjusted later. Input Tax Credit will not be available when GST is paid on advance received.
Interestingly, if the amount is termed as ‘adjustable deposit’ in a separate account (and not in individual debtor’s account), GST is not payable, though Company Law issues are likely to arise.