Customer Advances in Tally: Record Them and Show Them on the Invoice
Record customer advances correctly in TallyPrime, adjust them against the final invoice, show them on the invoice print, and understand the GST position.
Advances are common: a customer pays part of the order value upfront, and the invoice follows when goods are delivered or the service is done. Done badly, the advance sits unadjusted in the customer's account, the invoice shows the full amount as outstanding, and the customer is chased for money already paid. This guide explains how to record an advance receipt in TallyPrime, adjust it against the invoice, show it on the invoice print, and what GST says about advances.
The GST points below are a general summary, not tax advice. Confirm the treatment for your business with your CA.
GST on advances: goods vs services
| Advance for | GST at the time of advance? | Basis |
|---|---|---|
| Goods (regular registered supplier) | Generally no; GST is payable on the invoice | Notification 66/2017-Central Tax, dated 15 November 2017 |
| Services | Generally yes; time of supply is the earlier of invoice or receipt | Section 13 of the CGST Act |
The GST Council's explainer on time of supply under GST covers the rules in more depth.
Step 1: Record the advance receipt
- Make sure bill-wise details are on for the customer, as covered in our guide to bill-wise outstanding in TallyPrime.
- Record a receipt voucher (F6) for the customer.
- In the bill-wise details, choose the reference type Advance and give a reference you will recognise, such as the order number.
- For services, account for GST on the advance as your CA advises.
Step 2: Adjust the advance against the invoice
When you raise the sales invoice, it creates a new bill for the full value. Adjust the advance against it, so the customer's outstanding shows only the balance due. In the bill-wise details, select the advance and the invoice so they offset each other (Agst Ref). Check the customer's outstanding afterwards: the invoice should show the net balance, with no advance left floating.
Step 3: Show the advance on the invoice print
Customers find it easier to pay the right amount when the invoice says "Less: advance received" and shows the balance payable. The standard invoice print focuses on the invoice value, so showing the advance and net balance usually needs a print customization. AndurilTech lists an add-on named Show Advance Amount in Sales Invoice Print; read its product page for what it prints and which release it supports.
Common mistakes with advances
- Recording the advance as On Account and never adjusting it. The ageing report then shows the invoice as overdue.
- Raising the invoice for the balance only. The invoice should show the full supply value; the advance is adjusted against it.
- Ignoring GST on service advances, which is then missed in that month's return.
- Refunding an advance without a clear entry and narration linking it to the original receipt.
For other invoice layout changes, see our GST invoice customization guide.
Frequently asked questions
Is GST payable on an advance received for goods?
For most registered suppliers of goods (other than composition taxpayers), no. Notification 66/2017-Central Tax removed GST on advances for goods, so tax becomes payable when the invoice is issued. Confirm your case with your CA.
Is GST payable on an advance received for services?
Yes, generally. For services, the time of supply is the earlier of the invoice date or the receipt of payment, so GST is usually payable when the advance is received.
How do I adjust an advance against the sales invoice in TallyPrime?
Record the receipt with the bill-wise reference type Advance. When you raise the invoice, settle it by selecting that advance as an Agst Ref adjustment, so the customer's outstanding shows only the balance.