Gst on advance refunded - real estate company

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CA Bijay Shrestha

Never Give up....No matter what....

858 Points Joined April 2013

A real Estate Company received Advance from a Customer towards flats Rs. 2,00,000/- [includive of GST of rs. 15000/-] & Paid GST through ITC. After Sometime the Customer cancelled Flats and asked for Refund of Advance paid. The Company refunded full advance of Rs. 2,00,000/-. Now:

(1) Is the Company required to reverse GST Liability of Rs. 15,000/- [paid earlier through ITC] and adjust this towards another Liability?

(2) If The Company refunded only Rs. 1,50,000/- and Balance Rs. 50,000/- retained as Cancellation Charges Income, then Is GST liable to be paid on such Cancellation Charges provided Earlier GST Liability reversed?

(3) If the Company did not reverse Output GST, then GST on Cancellation charges not required because this Cancellation charges already forming part of Advance received on which GST of Rs. 15000/- already paid. Is it Correct?

Please suggest with relevant provisions.

Replies (4)

Pankaj Rawat

GST Practitioner

55062 Points Joined June 2017

1. Reverse the GST liability on value actually refunded Ie RS.150000/- By issuing the Refund Voucher
2. Issue the Tax Invoice for RS. 50000/- towards the cancellation charges & Charge GST on the same

Note : you cannot reverse GST on 2lac by issuing the refund voucher as in actual you refunded only 1.5lac

CA Bijay Shrestha

Never Give up....No matter what....

858 Points Joined April 2013

Originally posted by : Pankaj Rawat
	1. Reverse the GST liability on value actually refunded Ie RS.150000/- By issuing the Refund Voucher2. Issue the Tax Invoice for RS. 50000/- towards the cancellation charges & Charge GST on the same Note : you cannot reverse GST on 2lac by issuing the refund voucher as in actual you refunded only 1.5lac

Agree. In first case - Full Rs. 2 Lakh is refunded. so Full GST is required to be reversed. But My doubt is if full GST is reversed, it becomes Debit balance. So can this GST be used to set off other Liability?

Pankaj Rawat

GST Practitioner

55062 Points Joined June 2017

Dear

I replied refund voucher is to issued for RS. 1.5 lac & for 50 thousand you have to raise the Tax Invoice

Recept Voucher 2lac reced will be setoff against 1.5 lac refund voucher + 50 thousand tax invoice

Prakash Gehani

Consultant & Teacher(Whatsapp 8718057907

1306 Points Joined November 2017

In case GST is paid on advance received then gst paid on such advance will be adjusted against gst on sales when such sales is recognised or when advance refunded as case may be.

For eg. suppose total sales including gst of Rs. 37500 is Rs. 500000

1. suppose total sales 462500 & GST 37500
less: Advance adj.185000 & GST 15000
Net Sales 277500 & GST 22500
(to be filed in 3B)

2. suppose total sales 416250 & GST 33750
other income 46250 & GST 3750
Total 462500 &GST 37500

less: Advance adj.185000 & GST 15000
Net Sales 277500 & GST 22500
(to be filed in 3B)