GST and TCS on advance customer payments
You can calculate GST and income-tax TCS on a customer advance and apply the advance to a sales invoice. The following example uses a service advance. Confirm the applicable rates, thresholds, and TCS base before posting.
Enter an advance in a cash or bank receipt voucher
- [!INCLUDE [open-search](../../includes/open-search.md)] Enter Bank Receipt Voucher or Cash Receipt Voucher, and then choose the related link.
- Select Customer in Account Type field and select relevant customer code in Account No. field.
- Select G/L Account for cash or Bank Account for bank in Bal. Account Type field, and select relevant cash or bank account in Bal. Account No. field.
- Select relevant TCS Nature of Collection, GST Group Code, HSN/SAC Code, Location Code on journal line.
- GST on Advance Payment should be marked true.
Set Document Type to Payment and use a GST group with GST Group Type set to Service.
For example, service amount is INR 20000 and customer made an advance payment of INR 10,000, 18% IGST and 1% TCS has to be charged on the advance payment.
GST Calculation appears in the Fact Box as following:
Component Amount GST Base Amount 10,000 GST Transactional Value 8,474 (10000*100/118) IGST Amount 1525 (8,474*18%) TCS Amount 100 (10,000*1%) On posting of advance receipt from customer, GL Entries are as following:
Particulars Amount Bank Account 10000 IGST Payable (Interim) Account 1525 IGST Payable Account -1525 TCS Amount -100 Customer Account -9900
Later sales invoice for services is issued to the customer for INR 20,000, 18% IGST and 1% TCS has to be charged on the invoice amount, and the advance receipt from customer is applied with the invoice.
Apply the advance to a sales invoice
- [!INCLUDE [open-search](../../includes/open-search.md)] Enter Sales Invoices, and then choose the related link.
- Select Customer on Sales Invoice header.
- Select G/L Account for service or Item for goods on Sales Invoice line.
- Select relevant TCS Nature of Collection on Sales Invoice line.
- GST Group Code, HSN/SAC Code, GST Credit should have a value in G/L Account or Item card.
- Location Code field shouldn't be blank on both Sales Invoice header and line.
- Select the advance payment in Applies-to Doc. No. on the sales invoice header. Set TCS Nature of Collection before selecting the advance; changing the nature of collection afterward requires clearing the application.
GST calculation appears in the Fact Box as following:
Component Amount GST Base Amount 20000 IGST 2075 = [3,600 (20,000 * 18%)]-[1525 (8,474 * 18%)] TCS Amount 136 = [236 (23,600 * 1%)] - [100 (10,000 * 1%)]
The example shows the invoice tax together with the adjustment for tax on the applied advance. If the advance isn't applied, no advance tax adjustment is made.
On posting of sales invoice, GL Entries are as following:
Particulars Amount Customer Account 23736 IGST Payable Account -3600 Sales Account -20000 TCS Payable Account -136 IGST Payable Account 1525 IGST Payable (Interim) Account -1525
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In case of Intra-State Sale, CGST and SGST/UTGST are calculated.