Prepaid Expenses entry on which GST already paid

I hope you have received service , now as per section 13 of the CGSTAct ,  in case of services ( please refer and confirm) , time of supply for payment of GST on prepaid expenses earlier of the following 

1) Invoice date 

2) payment date 

So in your case advance GST paid in 24-25 of 25-26 therefore, time of supply is date of payment , which is correct , So next year only you have adjust prepaid expenses without GST .  

In short, In your Case, as per time of supply ,  GST payable in 24-25 only ,  

Take more opinion on this. 

Separate GST from accounting:

• GST: for an AMC billed upfront for 2 years, time of supply is the invoice or payment date (Sec 13). Full ITC is available when the invoice is received and the service starts being received (Sec 16(2)(b): for continuous services, receipt of service begins). Claiming the full ITC in FY 2024-25 is correct. No reversal is needed in FY 2025-26.

• Accounting: on invoice, Dr AMC Expense (FY 2024-25 portion, net of GST), Dr Prepaid AMC (FY 2025-26 portion, net of GST), Dr Input GST (full); Cr Vendor. On 1 April 2025 (or monthly), Dr AMC Expense, Cr Prepaid AMC.

• Don't include GST in the prepaid figure if ITC was claimed.

• Income-tax: deduction follows the accrual matching: the FY 2024-25 portion is deductible in FY 2024-25 and the balance in FY 2025-26. Some AOs accept the full deduction in the year paid if the service is a recurring cost, but follow the matching principle.

• TDS: deducted on the full invoice (excluding GST) at the time of credit or payment in FY 2024-25.

Yes. In the FY 2024–25 books, recognise only the AMC service relating to that year as expense and carry the portion relating to FY 2025–26 as a prepaid expense, assuming the service period supports that allocation. In FY 2025–26, transfer the prepaid balance to expense; no new GST payment is due merely because that accounting expense is recognised then.

For GST, ITC on an advance for services is generally not available just on payment. If the supplier issued a valid tax invoice for the full AMC and the other section 16 conditions are met—including receipt of the service—the invoice and service-period facts determine eligibility. Claiming ITC in FY 2024–25 solely because the full amount was paid may need review: verify the invoice, GSTR-2B and service commencement/receipt, and reverse or defer any ineligible portion as applicable. GST ITC timing does not require the expense to be charged to the P&L in the same year.

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