GST on Advance Received: When Tax Is Due, Receipt Voucher, Refund and Entries in BUSY

A customer pays in advance and the goods or service will follow later. Should GST be paid now, or when the bill is made? The answer depends on whether you supply goods or services, and getting it wrong means either tax paid early for nothing or interest on tax paid late.

The rule in one table

Reverse charge is different: for supplies under RCM, the time of supply rules for the recipient apply, so take your CA's view for advances you pay under RCM.

Advance for services: step by step

1. Receive the advance

   Say Rs 1,18,000 is received for a service at 18%. Treat it as inclusive of tax: taxable value Rs 1,00,000 and GST Rs 18,000.

2. Issue a receipt voucher

   Give the customer a receipt voucher with your GSTIN, the customer's details, the amount, tax rate and tax. If the rate or place of supply is not known, use 18% and treat it as inter-state.

3. Pay tax on the advance

   Show it in GSTR-1 table 11A and pay the Rs 18,000 in GSTR-3B of that month.

4. Issue the invoice and adjust

   When the service is done and the invoice issued (say Rs 2,00,000 + GST 36,000), adjust the advance in table 11B. Only the balance tax of Rs 18,000 is paid in that month.

5. If the deal is cancelled

   Issue a refund voucher for the advance returned and adjust the tax paid on it in GSTR-1 table 11A/11B of the month of refund.

Advance for goods

No GST is payable on the advance. Record it as an advance from the customer, issue a receipt for the money, and charge GST on the tax invoice when the goods are supplied. The invoice must be issued no later than the removal or delivery of the goods.

Entries in BUSY

• Goods: post a receipt voucher to the customer's account. When the sale is billed, the advance is adjusted against the bill (set bill-by-bill references so outstanding stays right: bill-by-bill outstanding in BUSY).
• Services: post the receipt and the tax on the advance, so GST payable shows in that month's GSTR-3B; reverse the advance tax when the invoice is made. Keep a separate ledger such as "GST on advances" so the 11A / 11B figures can be checked each month.
• Check before filing: the advance tax ledger should be nil once every advance is invoiced; any balance means an advance still open or an adjustment missed.
• Reconcile: add the advances to your monthly checks before GSTR-1 and GSTR-3B.

BUSY's exact advance-receipt options depend on version and configuration. Our team can set up the voucher types and ledgers for your business.

Need it done for you?

Our team sets this up remotely over UltraViewer, usually the same day. Call or message us, or see BUSY services.

Updated 03-11-2026 · Bharat Busy Care, Authorised BUSY Platinum Partner