An advance is money received before supply: a booking amount for a machine, a deposit for a wedding order, or a part payment for a bulk order of tiles. It belongs to the customer until the supply happens, so the books treat it as a liability, set against the invoice when it is raised.
The GST position (as of October 2026)
- Goods
- no GST is payable on the advance itself for most taxpayers; tax is paid when the invoice is issued.
- Services
- GST is payable on the advance in the month it is received. When the invoice is issued, the tax already paid is adjusted.
In both cases a receipt voucher is issued for the advance. If the order is cancelled and the money returned, a refund voucher is issued.
Setting it against the invoice
When the invoice is raised, the advance is applied to it, and only the balance remains due. A machine tool maker in Rajkot that takes 30% of ₹2,85,000 as advance shows ₹85,500 received and ₹1,99,500 due when the lathe is invoiced.
What goes wrong
Advances recorded as sales, or never set against an invoice, leave the customer's ledger showing both a credit and a debt.
In MatruOS, advances are recorded with a receipt voucher and set against invoices.