GST On Advance payment made against Proforma Invoice.

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This discussion clarifies the GST implications of making advance payments against proforma invoices, especially when original invoices are delayed. The consensus is that GST should only be booked upon receipt of the original tax invoice and actual service delivery, as input tax credit cannot be claimed based on a proforma invoice alone. Additionally, it's advised that GST TDS is applicable on advance payments and should be deducted accordingly.

A K SARMA

A K SARMA (Querist)
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02 June 2021 Kindly clarify whether we have to book GST (CGST/SGST/IGST) while making advance payment to the Service provider,(Part payment) against the Proforma Invoice received from the Service provider. due to COVID-19 situation the Service Provider is not able to send the Original Invoice. Right now we are not booking directly to Expenses GL but booking in the Advance GL and on receipt of the original invoice the expenses will be booked.
Regards.

CA. Bhavik P. Chudasama

CA. Bhavik P. Chudasama (Expert)
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02 June 2021 Hi,
You can book GST only when you receive the Services & you have the Original Tax Invoice with you.
Since you cannot claim Input Tax Credit on basis of Proforma Invoice it is advised not to book GST in the Books of Account till the time Tax Invoice is received.

A K SARMA

A K SARMA (Querist)
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02 June 2021 Dear Sir
Thank you very much for clarifying. also advise whether, GST TDS is applicable on the Advance payment.

CMA Poornima Madhava

CMA Poornima Madhava (Expert)
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02 June 2021 Such TDS is applicable on payments made by Govt/LA etc. Read for more: https://www.charteredclub.com/tds-gst/

Ganeshbabu K

Ganeshbabu K (Expert)
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03 June 2021 you are following correct method, you need to account it as advance and GST can be availed only on receipt of original invoice.

TDS applicable on payment of advance so need to deduct and pay TDS on advance

A K SARMA

A K SARMA (Querist)
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03 June 2021 Thank you Sir for clarifying.

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