GST and TDS on vendor advance payments
Liability of paying GST and TDS arises at the time of advance payment to vendor.
The following example uses illustrative GST and TDS rates. For GST on a vendor advance, use a reverse charge service transaction. The journal validation doesn't allow advance GST for goods.
Enter the advance in a cash or bank payment voucher
- [!INCLUDE [open-search](../../includes/open-search.md)] Bank Payment Voucher or Cash Payment Voucher, and then choose the related link.
- Select Vendor in Account Type field and select relevant vendor 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.
- Set Document Type to Payment. Select the relevant TDS Section Code, GST Group Code, HSN/SAC Code, and Location Code on the journal line.
- Check GST Reverse Charge and select GST on Advance Payment.
For example, service amount is INR 20000 and advance payment made to vendor for INR 10000, 18% GST (that is, 9% CGST and 9% SGST/UTGST) and 10% TDS has to be charged.
GST calculation for Intra-State or Intra-Union Territory transactions appears in the Fact Box as following:
Component Amount GST Base Amount 10,000 CGST 900 (10000*9%) SGST 900 (10000*9%) TDS Amount 1000 (10000*10%) On posting of advance payment made to vendor, GL Entries are as following:
Particulars Amount Vendor Account 10,000 SGST/UTGST Receivable (Interim) Account 900 CGST Receivable (Interim) Account 900 TDS Payable Account -1000 SGST/UTGST Payable Account -900 CGST Payable Account -900 Bank Account -9000
Wichtig
Amount Excl. GST supports payment scenarios that use a base amount excluding GST. Don't combine a nonzero Amount Excl. GST with GST on Advance Payment. The journal validation requires GST on Advance Payment to be cleared when that amount is nonzero.
Later invoice for service purchase issued by vendor for INR 20,000, 18% GST (that is, 9% CGST and 9% SGST/UTGST) and 10% TDS, is charged, and the advance payment is applied with the invoice.
Apply the advance on the purchase invoice
- [!INCLUDE [open-search](../../includes/open-search.md)] Purchase Invoices, and then choose the related link.
- Select Vendor on Purchase Invoice header.
- Select G/L Account for service on Purchase Invoice line.
- Select TDS Section Code on the invoice line.
- GST Group Code, HSN/SAC Code, GST Credit should have a value in G/L Account card.
- Location Code field shouldn't be blank on both Purchase Invoice header and line.
In the Application section, set Applies-to Doc. Type to Payment and select the advance in Applies-to Doc. No..
GST calculation appears in the Fact Box as following:
Component Amount GST Base Amount 20000 CGST 900 = [1800 (20000 * 9%)] - [900 (10000 * 9%)] SGST 900 = [1800 (20000 * 9%)] - [900 (10000 * 9%)] TDS Amount 1000 = [2000 (20000 * 10%)] - [1000 (10000 *10%)]
GST and TDS are calculated on the remaining amount, that is, Invoice Amount - Advance Payment Amount. If advance payment isn't applied with the purchase invoice, then GST and TDS are calculated on the whole invoice amount.
On posting the purchase invoice, GL Entries are as following:
Particulars Amount Vendor Account -19000 SGST/UTGST Payable (Interim) Account -1800 CGST Payable (Interim) Account -1800 SGST/UTGST Receivable (Interim) Account -1800 CGST Receivable (Interim) Account -1800 TDS Payable Account -1000 CGST Payable (Interim) Account 900 CGST Receivable Account 900 SGST/UTGST Payable (Interim) Account 900 SGST/UTGST Receivable Account 900 SGST/UTGST Receivable (Interim) Account 1800 CGST Receivable (Interim) Account 1800 Service Account 20000
Hinweis
In case of Inter-State Purchase, IGST is calculated.