Which treatment of gst on advance payment is correct ?

This query is : Resolved

Abhishek Goel (Querist)
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24 June 2017 Suppose 5% GST rate is applicable on the goods we sell. Now we have taken rs 105 as 50% advance(100+5 for GST) from customer.& Sales value is 200.

Option 1:

Upon receiving advance payment:-

Bank a/c dr 105

to GST pay. on adv 5
to Customer 100

GST pay. on adv dr 5
to Bank a/c 5

At the time of making sales:-

Customer dr 205

to Sales 200
to GST payable 5

GST payable dr 5
to Bank 5

Option 2:

Upon receiving advance payment:-

Bank a/c dr 105
to Customer 105

GST paid on adv dr 5
to Bank a/c 5

At the time of making Sales:-

Customer dr 210

to Sales 200
to GST payable 10

GST payable dr 10

to GST paid on adv 5
to Bank a/c 5

Please reply !

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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24 June 2017 Option 1 is the right entry.

Dibin Divyakumar

Dibin Divyakumar (Expert)
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24 June 2017 Option 2 will be the better accounting practice.

Abhishek Goel

Abhishek Goel (Querist)
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28 June 2017 Please suggest me the correct option !!

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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03 August 2025 https://docs.google.com/document/d/1NDYkhp85ogblt-8pdkehJ0xeLSGztdEg_Dhw0TwtkME/edit?usp=sharing

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