Glossary
What is an advance receipt under GST?
Money in before the goods or service go out. Whether tax is due on it depends on what you are selling.
Updated
In short
An advance receipt is a payment taken before the supply is made. SimpleERP records it as a receipt on the customer and applies it to the invoice later; how GST applies is for your accountant.
An advance receipt is a payment received before goods or services are supplied. As notified since November 2017, a regular taxpayer pays no GST on advances for goods; tax is due when the invoice is raised. For services, GST is due when the advance is received. For goods or services, the supplier issues a receipt voucher for the advance. The tax paid on the advance is adjusted against the final invoice, or refunded if the supply never happens.
Advance receipt under GST: a worked example
Annai Enterprises orders 15 office chairs mesh from Lakshmi Steel Furnitures and pays ₹50,000 in advance on 5 September 2026. The chairs ship on 20 September.
| Date | Event | GST due |
|---|---|---|
| 5 September | Advance ₹50,000 received, held on the customer | None, because these are goods |
| 20 September | Invoice: 15 × ₹6,450 = ₹96,750 plus ₹17,415 GST = ₹1,14,165 | ₹17,415 |
| 20 September | Advance applied to the invoice | Balance due ₹64,165 |
FAQ
Questions, answered
Do I pay GST on an advance for goods?
A regular taxpayer pays no GST on an advance for goods. Since a notification in November 2017, GST on goods is due at the invoice, not at the advance. Composition taxpayers and some special cases are treated differently; check with your accountant.
What is a receipt voucher?
A receipt voucher is the document a supplier issues under rule 50 of the CGST Rules for an advance received against goods or services, showing the amount, any tax and the place of supply. It is the advance's equivalent of an invoice. SimpleERP records the receipt but does not print a GST receipt voucher.
What if the order is cancelled after I take the advance?
For services where GST was paid on the advance, issue a refund voucher when you return the money and adjust the tax in your return. In SimpleERP, record the refund against the customer so the advance is cleared.
How do I apply an advance to the invoice?
In SimpleERP the advance sits on the customer as an unallocated receipt. When you post the invoice, allocate the receipt to it, and the invoice shows as partially paid with the balance due. The payments guide shows the steps.
Related
Keep reading
Time of supply
The point in time when GST on a supply of goods or services becomes payable.
Read morePayments & receivables
Receipts and payments allocated oldest first, receivables and payables ageing, and statements.
Read morePayment allocation
How to record partial payments, advances and on-account receipts against the right invoices, with a worked ₹50,000 allocation and the statuses that follow.
Read more
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