VAT on Advance Received.
What if a taxable person received advance from customers and couldn't determine the VAT applicability while receipt of advance. Do they need to charge 5% of VAT on this?
If the advance is against an agreed or proposes supply, one should be able to determine the tax treatment. Even for indirect exports (where overseas customer has to export the goods and provide documentations), zero rating can be applied only where it is pre-decided that goods will exported. Cases where VAT treatment would not be identifiable is generally where there is a retainer deposit from customer which is held for future supplies.0 Like
In such scenario, if you will be invoicing the customer separately for your service charges and the Government fee (license fee) and the license expense is recovered cost to cost, then VAT is to be applied only on your fees as Mr. Parth has mentioned ( i presume you would have communicated your service charges in advance so the same should identifiable) . However if you are providing the services as a bundle package then charging only the consolidated price to the customer, you would be liable for VAT on the entire value (i presume this is not the case for you).0 Like