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Do we need to book input vat while making Advance payment to suppliers ?

Payment (advance) to X Company for Value of AED/- which include the5% VAT for the supply of goods & service (which they would carry out only after the receipt of payments) How to treat Input VAT, when we make an advance payment to supplier towards their services or supply of good. Do we need to book input VAT while be process this advance payment ? Or We need the book the input VAT only when the invoice we received from the supplier which is in the future date ?

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Question added by Krishna Kumar , Accountant , Galfar Engineering and Contracting
Date Posted: 2018/01/16
PREETI SINGH
by PREETI SINGH , Assistant manager accounts , HARVEL AGUA INDIA PRIVATE LIMITED (HA)

YOU NEED TO PAY VAT FOR ANY ADVANCE RECEIVED FOR GOODS OR SERVICES, IF THE SUPPLY IS NOT FULFILLED IN THE SAME PERIOD, WHEN A SALES INVOICE IS RAISED AGAINST AN ADVANCE RECEIVED IN A DIFFERENT TAX PERIOD, YOU NEED TO ADJUST THE SALES WITH THE ADVANCE AND REVERSE THE TAX TAX LIABILITY GENERATED FOR THE ADVANCE RECEIVED.

Saji George
by Saji George , Finance Manager , MOUNT OF LIGHT MEDICAL COMPANY LTD

No need to charge input tax while advance payment to suppliers, it done only after getting Purchase invoice

Rakesh Sharma
by Rakesh Sharma , Sr. Manager Accounts & Finance , Emirates Glass LLC

Yes , Any avance paid or received VAT and Tax invocie is required.

kimberlyn hoyla
by kimberlyn hoyla , Asst. Supervisor for Finance and Accounting , Taneo Supilanas Alvez and Co.

We need to book input VAT while making advance payment, as VAT should be remitted on cash basis, after the company has paid the supplier, the latter should provide invoice to support the company's claim for the input VAT.

Bibin Kurian
by Bibin Kurian , Accountant , Wahat Al Ain Markets

Advance paid is not paid out of the bill, it's a random amount paid. Input vat is booked only when the bill is prepared, so it is booked when we recieve invoice from the supplier in future date.

Dhanya Reghu
by Dhanya Reghu , Accountant (Part Time) , Nandanam Paradise Apartments & Flats Owner’s Association

When a company receive advance it is treated as liability and no need to charge vat on that amount. VAT is calculated at the time of preparation of invoice. After charging the vat to the principal amount excess if any is paid to the supplier. Amount received in adavnce is not a service. it is treated as Current liability.

Imran  Ali
by Imran Ali , Accountant General , Maleh Hellow For Sweets LLC

No Need we record the Advance payment  when we received the Tax Invoice then we record the VAT with Purchases

SMITHA PRATHEESH
by SMITHA PRATHEESH , ACCOUNTS MANAGER , PRIME ROOFING SOLUTIONS PVT LTD

Advance can be given against proforma invoice   and input VAt can avail only at the time of  receipt of original invoice along with the receipts of taxable supplies. 

Tyrone Sequeira
by Tyrone Sequeira , Finance Manager , All Metals Industries LLC

Yes. VAT shall be accounted for while making advance payment against only taxable supplies. 

 

Naveen Kumar
by Naveen Kumar , Senior Tax Consultant , Crowe Mak Ghazali LLC

we have 2 options . 1st is we should book the vat amount if the all the goods are going to be received the the same months. and 2nd option is we can ook and cancel the the entry at the month end

NIZAR PUTTENKUNNU
by NIZAR PUTTENKUNNU , Group Finance Manager , Refa Gifts Markets LLC & Group of Companies

Advices to book VAT for advances, for which the goods are not receiving in the current month.  In this case pass entry for the VAT @ 5%.  You can cancel the VAT entry after receiving the goods by cancelling the entry passed for VAT on advances.

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