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Receipt/Refund Voucher To Be Issued for Advance Payment

Businesses tend to demand advances to safeguard their interest. The advance received may be adjusted with the final payment, future supplies or may be refunded. Under the GST law, for any advance received (for any supply), the time of supply is fixed at the point when the advance is received, irrespective of the fact whether the supply is made or not. That means GST on the advance amount needs to be paid at the time at which advance is received. This requires compliances with a few procedures, documentation and reconciliation.

In this article, we will help you understand the points to remember while issuing advance related vouchers:

Receipt Voucher

As per Section 31(3)(d) of the CGST Act, 2017, when a taxpayer receives advance payment

(for any supply of goods or services or both) he/she should issue a receipt voucher or any other document containing the prescribed particulars. This document evidences the receipt of such payment.:

Details To Be Mentioned In Receipt Voucher

As per Rule 50 of the CGST Rules, 2017, the Receipt Voucher should contain the following particulars:

  • Name, address and Goods and Services Tax Identification Number (GSTIN) of the supplier;
  • A consecutive serial number (document number);
  • Date of issue;
  • Name, address and Goods and Services Tax Identification Number (GSTIN) of the recipient (if registered);
  • Description of goods or services;
  • Advance amount
  • Rate and amount of tax (central tax – CGST, State tax – SGST, integrated tax – IGST, Union territory tax – UTGST or cess);
  • Place of supply along with the name of State and its code (in case of inter-State supply);
  • Applicability of reverse charge mechanism; and
  • Signature or digital signature of the supplier or authorised representative.

Points To Remember

  • As per the proviso to Rule 50, if, at the time of accepting the advance payment:
    • If the rate of tax is not determinable, the GST should be paid at the rate of 18%.
    • If the nature of supply is not determinable, the supply will be treated as an inter-State supply, and GST should be paid accordingly.
  • When the advance is received, but the supply is subsequently not made, the supplier may have to refund the amount of advance. A refund voucher needs to be issued in such cases (when no tax invoice is issued). Read more about the refund voucher below.

Note: If a tax invoice has already been issued, a credit note will have to be issued to square off the transaction.

  • A composition dealer does not have to pay any tax (GST) on advances received if such advances relate to his/her outward supplies.

Refund Voucher

As per Section 31(3)(e):

  • When a GST registered taxpayer has received advance payment (in respect to any supply of goods or services or both) and
  • He/she has issued a receipt voucher promptly as per rules, then, if in case there is no supply made subsequently, and no tax invoice is issued;

such taxpayers can issue a refund voucher against the advance payment to the person who had made the payment.

Details To Be Mentioned In Refund Voucher

As per Rule 51 of the CGST Rules, 2017, the Refund Voucher should contain the following particulars:

  • Name, address and Goods and Services Tax Identification Number (GSTIN) of the supplier;
  • A consecutive serial number (document number);
  • Date of issue;
  • Name, address and Goods and Services Tax Identification Number (GSTIN) of the recipient (if registered);
  • Number and date of Receipt Voucher issued as per the provisions of rule 50;
  • Description of goods or services in respect of which the refund is made;
  • Amount of Refund
  • Rate and amount of tax (central tax – CGST, State tax – SGST, integrated tax – IGST, Union territory tax – UTGST or cess);
  • Applicability of reverse charge mechanism; and
  • Signature or digital signature of the supplier or authorised representative.

Note: The taxpayer issuing a refund voucher can apply for a refund of GST paid on such advances by filing FORM GST RFD-01 under the category ‘Refund of excess payment of tax’.

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