Advance Payments Under GST: Receipt Voucher, Refund Voucher and Where a Proforma Invoice Fits
Many small businesses ask for an advance before starting work: a token amount for a custom order, a booking amount for an event, or the first instalment of a project. Under GST, receiving money before the supply has its own paperwork. The main document is the receipt voucher.
This guide explains when you need a receipt voucher, what it must show under Rule 50, when GST is payable on the advance, and how a proforma invoice is different.
What is a receipt voucher?
A receipt voucher is a document a registered person issues when they receive an advance payment for a supply of goods or services that has not yet happened. It is required by Section 31(3)(d) of the CGST Act, and its contents are set out in Rule 50.
It is not a tax invoice. When the supply is actually made, you still issue a regular tax invoice, and adjust the advance against it.
Is GST payable on advances?
This is where goods and services differ:
- Advance for goods: Since November 2017 (Notification 66/2017-Central Tax), most registered suppliers do not have to pay GST on advances received for goods. Tax is paid when the invoice is issued.
- Advance for services: GST is payable at the time the advance is received, because the time of supply for services is the earlier of the invoice date and the payment date.
So for services, the receipt voucher becomes the document on which you pay tax in that month's return. When you later issue the invoice, the tax already paid on the advance is adjusted.
Example: A Nagpur interior designer receives a 50,000 advance on 20 September for work starting in October. GST at 18% is included in the advance. The taxable value is 42,373 and the tax 7,627 (3,813.50 CGST and 3,813.50 SGST). This tax is paid in the September return. When the October invoice for the full 2,00,000 + GST is issued, only the balance tax is paid.
What a receipt voucher must contain
Under Rule 50, a receipt voucher must contain:
- Name, address and GSTIN of the supplier.
- A consecutive serial number of not more than 16 characters, using letters, numbers, hyphen or slash, unique for the financial year.
- Date of issue.
- Name, address and GSTIN or UIN of the recipient, if registered.
- Description of goods or services.
- Amount of advance taken.
- Rate of tax (central, state, integrated, union territory tax or cess).
- Amount of tax charged under each head.
- Place of supply, with the name of the state and its code, for inter-state supplies.
- Whether tax is payable on reverse charge.
- Signature or digital signature of the supplier or an authorised representative.
When the details are not known yet
- If the rate of tax cannot be determined when the advance is received, charge tax at 18%.
- If the nature of supply (intra-state or inter-state) cannot be determined, treat it as an inter-state supply and charge IGST.
See our guide on place of supply for how to decide between CGST + SGST and IGST.
If the deal is cancelled: refund voucher
If no supply is made and no tax invoice is issued, and you return the advance, you issue a refund voucher under Rule 51. It must reference the receipt voucher and show the amount refunded and the tax on it. This lets you adjust the tax you paid on the advance in your return.
Receipt voucher vs payment receipt
These two are often confused:
| Receipt voucher | Payment receipt | |
|---|---|---|
| When | Money received before supply | Money received after an invoice |
| GST legal document | Yes (Section 31(3)(d), Rule 50) | No, it is commercial proof of payment |
| Shows tax | Yes, rate and amount | Usually not; refers to the invoice |
| Reported in GSTR-1 | Yes, advances table (for services) | No |
Where does a proforma invoice fit?
A proforma invoice is a quotation in invoice format. You send it before the sale to show the buyer what they will be billed: items, prices and estimated tax. Buyers often need one to approve a purchase or arrange a bank payment.
Under GST, a proforma invoice:
- Is not a tax invoice and does not create a tax liability.
- Cannot be used by the buyer to claim input tax credit.
- Does not need to follow the invoice number series. Use a separate prefix, such as PI/26-27/001.
A typical flow is: proforma invoice → advance received → receipt voucher → supply → tax invoice (adjusting the advance) → payment receipt for the balance.
Common mistakes
- Not paying GST on service advances, then paying it all with the invoice. This leads to interest for the late payment.
- Treating a proforma invoice as a tax invoice and reporting it in GSTR-1.
- Forgetting to adjust the advance on the final invoice, so tax is paid twice.
- No refund voucher when an order is cancelled, so the tax paid on the advance is stuck.
Create the documents
OwnInvoice has free tools for every step: a proforma invoice generator for the quote, a tax invoice for the supply, and a receipt generator for payments. Each one uses its own number series.
Note: This article explains the general position for information. The treatment of advances depends on the type of supply and on notifications in force; confirm your case with a GST practitioner.