GST on advance payment received from customer

The advance payments received from the customers might need to be reported in GSTR-1 along with GST Rates.

Process of GST calculation on advance payment from customer has been explained in this document.

Create a general journal or a bank or cash receipt voucher

  1. [!INCLUDE [open-search](../../includes/open-search.md)] Enter General Journals, Bank Receipt Voucher, or Cash Receipt Voucher, and then choose the related link.
  2. Set Document Type to Payment and Account Type to Customer, and then select the customer in Account No. The customer's GST Customer Type must be Registered or Unregistered.
  3. Select G/L Account or Bank Account in balancing account type, and select the cash or bank account.
  4. Enter Location Code, GST Group Code, HSN/SAC Code, and GST Place of Supply, and turn on GST on Advance Payment. Use a GST group of type Service. Business Central rejects this option for Goods.

For example, advance payment received from customer for INR 10,000 on which 18% GST (that is, 9% CGST and 9% SGST/UTGST) has to be charged.

  • GST calculation appears in the Fact Box as follows:

    Component Amount
    Advance Payment 10,000
    GST Transactional Value 8,474 (10000*100/118)
    CGST 763 (8,475*9%)
    SGST/UTGST 763 (8,475*9%)

  • GL Entries for advance payment received from customer, as follows:

    Particulars Amount
    Bank Account 10,000
    CGST Payable (Interim) Account 763
    SGST/UTGST Payable (Interim) Account 763
    CGST Payable Account -763
    SGST/UTGST Payable Account -763
    Customer Account -10000

Reversal of advance payment received from customer

If the customer advance needs to be corrected or the entry is wrongly posted, in such a case the entry can be reversed and new entry can be created.

  • Reversal GL Entries for advance payment received from customer, as follows:

    Particulars Amount
    Customer Account 10000
    CGST Payable Account 763
    SGST/UTGST Payable Account 763
    CGST Payable (Interim) Account -763
    SGST/UTGST Payable (Interim) Account -763
    Bank Account -10,000
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In case of Inter-State Advance Payment, IGST is calculated.

GST Application of Receipt and Invoice

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