Query on Treatment of Customer Advance as Deposit

[Rakhi Mishra]

Respected Members,

Our Pvt. Ltd. Company had received an advance from a customer. Since more than one year has passed, will it be treated as a deposit u/s 73 of the Companies Act, 2013?

Kindly share your views.

[Mukesh M]

Rule 2(1)(c), certain amounts received by a company are not treated as deposits. One such exemption applies to advances received in the ordinary course of business, such as:

• Advance for supply of goods or services
• Advance for long-term projects
• Advance for immovable property

Note: advance to be appropriated within 365 days to respective debtor account

Thanks

Mukesh

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[Rakhi Mishra]

As more than one year has elapsed, we would like to know the appropriate way to settle this.

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