Vendor Advance payment with GST?

With Effect From 15th November 2017, GST is applicable only on Advance Received incase of Supply of SERVICES. No GST is applicable if the Advance Received is on account of Supply of Goods. This relaxation is applicable only for Supply of Goods and not for Supply of Services.

As per Notification No. 66/2017 - Central Tax, dated 15th November 2017, Advance Received incase of Supply of Goods will be Exempted. Only the Advance Money incase of Supply of Services will be taxable and the Supplier will collect GST from the Recipient on the advance amount by issuing a Receipt Voucher under Section 31(3) clause (d) of the CGST Act 2017 read with Rule 50 of the CGST Rules 2017.

Coming to your example, No GST shall be applicable on the advance amount of Rs. 10,000 paid to Mr. ABC since it is on account of Supply of "GOODS". GST shall be applicable on the entire value of Rs. 40,000 when the final Tax Invoice is being raised.

And if you are taking Supply of Services from Mr. ABC, then GST shall be applicable on the advance amount of Rs. 10,000 paid to Mr. ABC and he will issue you a Receipt Voucher acknowledging the payment of advance amount and GST amount.

Hope you understood Sir...

Regards
Shivam RC.