Accrued Income & its Tax Impact (GST & Income Tax)

[Rajesh Raju]

Dear All,

I need opinion on the below:

For the month of March, there were some accrued income and hence they have recognized the revenue in the month of March and also they have raised the GST invoices to the client. But client has not accepted the invoice and have rejected the same to reissue for April or subsequent month when it is due.

I had a opinion that, if there is an accrued income and not due to be billed, only to the extent of the cost, the revenue can be recognized and income taxes has to be paid accordingly and there should not be any GST invoices to be raised and no liability to be created for GST. Instead an internal invoice can be raised and to be grouped under unbilled revenue and to be reversed as and when billed. Can anyone vouch for it or guide me the proper methodology, please

Thanks in Advance

Rajesh R

[Madhukar Challa]

Hi,

AS / IND AS dosen't permit billing of accrued revenue, unless the company is into contracting & follows accounting under standards - AS 7 / IND AS 11.
Under construction contracts, un-billed revenue can be raised and accounted,
where the amount is raised on cost of work completed & work certification is pending to be received.

I have attached the IND AS 11 standard issued by ICAI / MCA, for further reference, on this subject.

Since this involves work certification & estimation, please liaise with the Statutory auditor as well, on this front.


Thanks & Regards,
Madhu

Sent from Thunderbird on Linux

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[Rajesh Raju]

Dear Madhu,

Thanks for the valuable inputs. It would be of great help

Thanks,

Rajesh R

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