GST Liability and Adjustments on Advance Receipts in Tally
Advance Receipts from Buyers against Supplies
A supplier has to pay tax on receipt of advance for supplies to be made in future, if the turnover of the buyer in previous year is more than 1.5 crores.
- Suppliers with Turnover not exceeding 1.5 crores in previous year : So, for suppliers having Turnover upto 1.5 crores there would be no Tax liability for parties receiving advance. They would create receipt voucher for Advance received from customers as usual, without any effect for GST. In GST returns (GSTR-1 & GSTR-3B), these transactions would be reported under the section Not Relevant for Returns section
- Suppliers with Turnover exceeding 1.5 crores in previous year : Suppliers having turnover more than 1.5 crores in previous Financial Year need to set up relevant options for GST Liability on Advance Received.
GST set up for Tax Liability on Advance Receipt in Tally
At Statutory & Taxation screen (GoT>F11 Features>Statutory & Taxation), set Yes to get Company GST set up screen. Set yes at Set / Alter GST Details to get GST Details screen. At GST Details screen, set Yes at Enable Tax Liability on Advance Receipts, to enable GST Liability on Advance Receipt.
GST set up for Tax Liability on Advance Receipt in Tally
GST Chargeable Advance Receipt Voucher Entry in Tally
At GoT> Accounting Vouchers, click F6: Receipt button to get Receipt Voucher entry screen to record receipt of Advance .
GST chargeable Advance receipt
At Receipt Voucher entry screen , click V:Advance Receipt but to mark the Voucher as Advance Receipt (the Mark appears in the receipt voucher entry screen).
Voucher Entry Button Bar in Tally
- Cash / Bank Account : At Account, select Cash / Bank Account, as the case may be.
- Party Details : At Particulars, Select Party Ledger Account to get Party Details pop up screen . The details of Party (Address, GSTIN etc are carried from Party master).
Party Details for GST Chargeable Advance Receipt in Tally
- Advance Receipt details : You get Advance Receipt details screen . At particulars column, select the Item / Service for which Advance is received. Enter the amount of Advance received against the supply. According to the tax rate applicable for the selected Item / Service, the Amount would be split into Taxable value and tax (CGST+SGST or IGST as per nature of supply (Inter State / Intra State). The total of Taxable Amount and Tax would be equal to Amount Received.
GST details for Advance Receipt in Tally
- Bill Allocation Details : You get back to main voucher screen and get Bill Allocation screen. Set the Refence at Bill Allocation screen to get back to the main voucher screen.
Enter Voucher Narration. Save the Voucher.
Bill Allocation for Advance receipt in Tally
GST Chargeable Advance Receipt Voucher Printing in Tally
To print Receipt, at Receipt Voucher screen, click P:Print button to get Voucher Printing screen. Set Yes at Print GST Advance Receipt to print Advance Receipt Voucher with GST details
GST Chargeable Advance Receipt in Print in Tally
Creation of GST Liability on Advance Receipt
Entry of Receipt Voucher just affects the Accounting System. Though you enter GST details, the GST system does not automatically get updated (GST Liability not created on its own). If the Sales Bill is not created in the same month and the Advance not fully adjusted against the Sales Bill, you have to
create the GST liability for the month, through a Journal Voucher. However, if sales Bill is created in the same month and advance adjusted, you do not need to create the Journal Voucher for creation of Tax Liability.
GST on Advance Ledger Account Master in Tally
When the receipt of advance and adjustment of advance (on creation of sales bill) happen in different Return period, you have to first create a liability for the Tax Payable in the Tax Return period in which Advance is received. In later Tax filing period, when Advance is adjusted against Sales Invoice, the Tax liability entry is reversed, and the balance in the Tax Liability is squared off.
Create a temporary intermediate ledger account (e.g Tax on Advance) to record the Tax liability entry without setting any GST parameters set. This is an intermediary account which would ultimately be squared on adjustment of Advance & Tax on Advance
Select GoT>Accounts Info>Ledger>Create to get Leger Entry screen to create the Ledger Account. Select Current Asset at Under. Set No at Inventory Values are affected. Set Not Applicable at Is GST Applicable. Set No at Set/ Alter GST details. This Ledger Account would be used in Journal Voucher only, to create and adjust the GST Tax liability, in respective Return filing period.
GST on Advance Temporary Ledger Account creation in Tally
GST on Advance Liability Accounting in Tally
If Advance not adjusted in the same Tax Return period in which advance is received, GST Tax Liability on Advance received, is to be created, as shown in the Advance Receipt Details in Receipt Voucher.
Select GoT>Accounting Voucher>F7:Journal to get Journal Entry screen, to create a Journal Voucher for GST liability on Advance received.
Journal Voucher for Tax on Advance Receipt Liability creation
At Journal Voucher entry screen, select Tax on Advance Account and enter the amount of Total Tax Liability on Advance as per Receipt Voucher, in Debit Column. Select the Tax Accounts and enter the Amount of Tax in Credit Column, as per Receipt Voucher.
GST chargeable Advance Adjustment Details : At Journal Voucher entry screen, Click J:Stat Adjustment button to get Stat Adjustment screen to enter the GST Adjustment details :
GST on Advance Receipt Adjustment in Tally
- At Type of Duty / Tax, select GST
- At Nature of Adjustment, select Increase in Tax Liability
- At Additional details, select On Account of Advance Receipts
Advance Receipt GST Nature of Adjustment selection
The options selected are reflected in the main voucher screen for info.
GST on Advance Receipt Details entry in Voucher :At voucher main screen, set Yes at Provide GST Details, to get Advance Details screen. At Ledger Name, select Party Ledger Account from the list of Ledger Accounts. Details of the Ledger Account (Place of Supply, Registration Type, Party Type & GSTIN) are auto filled from the selected Ledger Account Master
GST chargeable Advance Receipt details in Voucher
GST Sales Invoice entry in Tally
On supply of materials / service, create the sales Invoice, as usual. Enter Voucher Date, select Party Ledger Account, Enter Item details (in Item Invoice) or Ledger Accounts (in Accounting Invoice). Select the Tax Accounts. The Tax amount would be auto computed in respective heads. Enter Other Ledger Accounts and amount, if any.
GST Sales Invoice entry in Tally
- Bill Allocation details : At Bill Allocation screen, enter Bill details at as usual
GST Sales Invoice Bill Allocation in Tally
- Tax Analysis : Click A:Tax Analysis to get Tax Analysis screen view Tax Details.
GST Sales Invoice Tax Analysis disply in Tally
GST Sales Invoice Printing : To print the Sales Invoice, at Sales Voucher entry screen, click P:Print button and print the Sales Invoice, as usual.
Advance & GST Liability Adjustment in Tally
Now create another Journal Voucher to reverse the Tax Liability created earlier at the time of receipt of Advance. Select (GoT>Accounting Voucher- F7:Journal) to get Journal Voucher entry screen. Select the Tax Accounts and enter the Amount of Tax at Debit column as per Receipt Voucher. Select Tax on Advance Account and enter the amount of Total Tax Liability on Advance at Credit column, as per Receipt Voucher. This Journal Voucher would be just reverse of the Journal Entry for creation of Tax Liability in earlier Tax Return Period
Adjustment of GST on Advance in Tally
GST on Taxable Advance Adjustment Details
At Journal Click J:Stat Adjustment button to get Stat Adjustment screen to enter the GST Adjustment details :
- At Type of Duty / Tax, select GST
- At Nature of Adjustment, select Decrease in Tax Liability
- At Additional details, select Sales Against Advance Receipts
The options selected are reflected in the main voucher screen for info.
GST on Taxable Advance Adjustment Details
Taxable Advance Adjustment GST Details : At voucher main screen, set Yes at Provide GST Details, to get Advance Details screen . At Advance receipt number, enter the reference of Advance as entered in earlier Receipt voucher. At Advance receipt date, enter the date of earlier Receipt voucher. At Ledger Name, select Party Ledger Account from the list of Ledger Accounts. Details of the Ledger Account (Place of Supply, Registration Type, Party Type & GSTIN) are auto filled from the selected Ledger Account Master
Taxable Advance Adjustment GST Details
You should create the Reversal Journal to the extent of Advance Adjusted against sales Invoice. If the Tax in sales Invoice is lower than the Tax in Advance received (because sales Bill is lower than the amount of Advance received), then you should reverse the Tax amount to the extent of Tax charged in sales Bill. The balance amount would be adjusted against subsequent Invoice, or the Balance Advance is to be refunded (if not further sales Bill is to be prepared).
Refund of GST Charged Advance in Tally
Sometimes Advance may have to be returned in full (if the supply is cancelled or for some other reason). Sometimes, the supply may be for lesser amount than advance received. In that case, balance amount of unadjusted Advance is to be refunded. In such case, GST on Advance and Tax Liability of Advance is also to be adjusted.
GST Chargeable Advance Receipt, Adjustment & Refund Cycle in Tally
The cycle of vouchers related to GST Chargeable Advance Receipt are :
- Receipt Voucher for receipt of Advance
- Journal Voucher for creation of Liability of GST on Advance received
- Refund Voucher for refund of Advance received
- Journal Voucher for reversal of GST on advance
All the vouchers in the chain are shown next, to explain the complete process related to Advance Receipt, Tax Adjustments & Refund of Advance.
GST Chargeable Advance Receipt Voucher in Tally
On receipt of advance received from customer, create a Receipt Voucher (GoT>Accounting Voucher>F6:Receipt) to get Receipt Voucher entry screen. The steps of entry of Receipt Voucher for receipt of advance has been explained earlier.
Receipt Voucher for GST Chargeable Advance receipt in Tally
The voucher entry for receipt of advance and the inner details are shown for reference
Bill allocation details entry of Advance receipt in Tally
GST Liability creation on Advance Receipt
The Journal Voucher for creation of Liability on GST for Advance received is shown. The entry process of creation of liability for receipt of advance have been explained earlier.
Select GoT>Accounting Voucher- F7:Journal to get Journal Voucher entry screen. At Journal Voucher entry screen, select Tax on Advance Account and enter the amount of Total Tax Liability on Advance as per Receipt Voucher in Debit Column. Select the Tax Accounts and enter the Amount of Tax in Credit column, as per Receipt Voucher.
Advance Receipt Adjustment : At Receipt Voucher screen, click F:Refund of Advance button to get Stat Adjustment screen.
Button Bar at Voucher Entry for Advance Adjustment
At Stat Adjustment screen enter the GST Adjustment details :
- At Type of Duty / Tax, select GST
- At Nature of Adjustment, select Increase of Tax Liability
- At Additional details, select On Account of Advance Receipts from the list
The options selected are reflected in the main voucher screen for info.
Stat Advance details of Tax liability of Advance receipt
Advance Receipt Adjustment GST Details : At voucher main screen , set Yes at Provide GST Details, to get Advance Details screen . At Ledger Name, select Party Ledger Account from the list of Ledger Accounts. Details of the Ledger Account (Place of Supply, Registration Type, Party Type & GSTIN) are auto filled from the selected Ledger Account Master
GST chargeable Advance Receipt details entry in Voucher in Tally
Refund of GST Chargeable Advance to Buyer in Tally
To refund the Advance receipt, select GoT>Accounting Voucher- F5:Payment create a Payment Voucher. At Payment Voucher, select Party ledger Account and enter the Amount of Refund.
Click F:Refund of Advance Recd button
GST chargeable Advance Receipt details entry in Voucher in Tally
Select the Party ledger Account and enter the amount of Refund. Click F:Refund of Advance Received to get Refund details screen. Select the Item. Enter Refund Amount. The tax details are auto populated. At main voucher screen,
Set Yes at provide GST details to get Original Receipt details screen .
Original Advance Receipt adjustment
Enter the details of original receipt voucher for receipt of advance (which is being refunded now).
At Bill allocation screen , select Against Ref at Type of Reference and select the reference of original advance receipt to square off the Advance)
Bill Allocation details for Advance Refund
Bill Allocation details for Advance Refund
GST Chargeable Advance Refund voucher Printing in Tally
At payment Voucher screen, click P:Print to get Refund Voucher printing screen. Set Yes at Print Refund Voucher. The refund voucher is printed as per printing configuration set .
GST Chargeable Advance Refund Details
GST Liability adjustment on Advance Refund in Tally
On Refund of Advance, on which you earlier created Tax Liability, you have to again create a Journal Voucher to reverse the Tax Liability.
Select GoT>Accounting Voucher- F7:Journal to get Journal Voucher entry screen. Select the tax Account and enter the Tax Amount of Refund of Advance in Debit column. Select Tax on Advance Account and enter the Tax Amount under Credit column.
Enter the details of refund of Advance
GST Chargeable Advance Refund details
Stat Adjustment of GST Chargeable Advance Refund : Click J:Stat Adjustment button to get Stat Adjustment screen .
GST Chargeable Advance Refund details
At Type of Duty / Tax, select GST. At Nature of Adjustment, select Decrease of Tax Liability. At Additional details, select Cancellation of Advance Receipts from the list. The options selected are reflected in the main voucher screen for info .
Advance received for Supply under GST Reverse Charge in Tally
For Advance Received by the supplier, from the customer, for supply of Goods / Services subject to RCM, you have to create Liability for RCM and also Liability for Advance Received. Both the concepts have been explained earlier. Here we explain the entries for Advance Received from Customer against supply of Goods / Service under RCM.
GST RCM set up in Ledger Account Master in Tally
For Supply under Reverse Charges, set the RCM option at the respective Ledger Account for Service / Stock Item. Set Yes at Set / Alter GST Details to get GST Details screen .
GST RCM set up for Ledger Account Master in Tally
At GST Details screen, set Yes at Is Reverse Charge Applicable, to activate the RCM option for the Service purchase.
GST RCM set up for Ledger Account Master in Tally
Voucher entry for RCM chargeable Advance Receipt
Select GoT>Accounting Voucher>F6:Receipt) to get Receipt Voucher entry screen to make entry for Advance received, in same way explained earlier. Click V:Advance received button.
Select Cash / Bank Account. Select Party Ledger. Enter Amount received (including GST) to get Advance Receipt details screen. Enter GST details of Advance Received.
GST details of RCM Chargeable Advance Receipt in Tally
Bill allocation details for RCM Chargeable Advance receipt
Bill allocation details for RCM Chargeable Advance receipt
GST Chargeable Advance Receipt Details entry in Voucher : At Advance details screen, select Stock Item / Ledger Account (to get list of Ledger Account, press Alt+L at Advance Receipt Details screen, if you do not get the Ledger Account selection list).
Enter the amount of advance received (including the Tax Amount). The amount is split up into Advance Amount, Taxable Value and Tax Amount against the applicable Tax Ledger Account and displayed. A note Amount subject to Reverse Charge appears at the bottom of the screen, for info
Party Details for Advance receipt
Printing of RCM Chargeable Advance Receipt : To print Advance Receipt, at Receipt Voucher screen, click P:Print button to get Receipt Printing screen. Set Yes at Print GST Advance receipt to print the Advance Receipt as per Configuration option set, as explained earlier. The printed receipt voucher also contains a note Amount subject to Reverse Charge. Save the Voucher.
Sales Invoice entry for supply against RCM applicable Advance Received
On supply, create Sales Invoice (GoT>Accounting Invoice- F8:Sales) as usual to get sales Invoice entry screen .
GST Chargeable Advance Receipt printing
Select Party Ledger Account. Select the sales Account (Reverse Chargeable) and enter the Amount.
- GST chargeable Advance Adjustment : At Bill allocation screen , select the Advance Reference and enter Advance adjusted. The balance would be allocated to the Bill Reference as New Reference.
Bill allocation for adjustment of Advance received
- Tax Analysis : Click A:Tax Analysis to view the Tax Analysis details . A note Amount is subject to Reverse Charge appears in the Tax Analysis screen for info.
GST details on Advance received against RCM Chargeable supply.
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