Accounting for GST on Expenses
This query is : Open
17 April 2021
M/s BL Ltd,a Public Company, has given a contact on 01.02.2021 to M/s Smooth Paint Pvt Ltd for Rs. 60 Lakhs + 18 % GST total Rs. 70.80 Lakhs for overhauling & painting a various machines within time limit of 6 month from date of contact. The work is of Revenue nature. As per the terms of agreement payment shall be made after completion of works.
As on 31.03.2021 (i.e. on balance sheet date ) M/s BL has surveyed the work done till date and measure the work done by contactor and found that only 20% of work having value Rs. 14.16 lakhs (Rs. 12 lakhs + GST Rs. 2.16 lakhs) has been completed by to M/s Smooth Paint Pvt. Ltd. No payment has been made for this part work since as per the terms of agreement payment shall be made after completion of entire work.
What shall be entry in the books of accounts of M/s BL Ltd as on 31.03.2021 ( Balance sheet date )
Option1:
Overhauling & Painting Exp Dr. 12,00,000.00
To M/s Smooth Paint Pvt Ltd 12,00,000.00
Option2:
Overhauling & Painting Exp Dr. 12,00,000.00
CGST Receivable A/c Dr 108000.00
CGST Receivable A/c Dr 108000.00
To M/s Smooth Paint Pvt Ltd 14,16,000.00
In Nutshall DO we should show the GST on part value of work done( calculated on estimated basis ) as input receivable in Balance sheet EVEN if the bill is NOT received.
Kindly back your answer with relevant para of Accounting standard or guidance notes .
As on 31.03.2021 (i.e. on balance sheet date ) M/s BL has surveyed the work done till date and measure the work done by contactor and found that only 20% of work having value Rs. 14.16 lakhs (Rs. 12 lakhs + GST Rs. 2.16 lakhs) has been completed by to M/s Smooth Paint Pvt. Ltd. No payment has been made for this part work since as per the terms of agreement payment shall be made after completion of entire work.
What shall be entry in the books of accounts of M/s BL Ltd as on 31.03.2021 ( Balance sheet date )
Option1:
Overhauling & Painting Exp Dr. 12,00,000.00
To M/s Smooth Paint Pvt Ltd 12,00,000.00
Option2:
Overhauling & Painting Exp Dr. 12,00,000.00
CGST Receivable A/c Dr 108000.00
CGST Receivable A/c Dr 108000.00
To M/s Smooth Paint Pvt Ltd 14,16,000.00
In Nutshall DO we should show the GST on part value of work done( calculated on estimated basis ) as input receivable in Balance sheet EVEN if the bill is NOT received.
Kindly back your answer with relevant para of Accounting standard or guidance notes .
17 April 2021
1) Provisional entry to the extent of the work completed can be made in the books of the company at the end of FY. TDS also to be considered for such provisional entry.
2) No ITC can be availed (on the basis of estimation) in respect of such provisions. Input tax credit can only be availed on receipt of invoice from the contractor.
Refer section 16 of CGST Act to know more on eligibility and conditions for taking ITC: https://taxguru.in/goods-and-service-tax/input-tax-credit-gst-section-16-18-cgst-act-2017.html
2) No ITC can be availed (on the basis of estimation) in respect of such provisions. Input tax credit can only be availed on receipt of invoice from the contractor.
Refer section 16 of CGST Act to know more on eligibility and conditions for taking ITC: https://taxguru.in/goods-and-service-tax/input-tax-credit-gst-section-16-18-cgst-act-2017.html
17 April 2021
What will be the implications if full amount is paid in advance is paid to SMOOTH PAINT (Rs. 60 Lakhs + 18 % GST)
17 April 2021
Account it as an advance to the vendor and the same can appear under Current Assets in the Balance Sheet
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- ITC temporary reversal and reclaim
- Inventory of finished goods
- Applicable TDS rate for sale of property in Nov 2024
- Tds on building rent monthly
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- Quiery in relation to GST liability in case of an advocate who has obtained GST registration.
- Sale of property furniture sale
- Can we claim ITC of Feb-2024 in the month of November-2024 which was not claimed by oversight
- RCM INVOICING FROM NOV-2024
- Clarification on Documentation of Paid-Up Capital Contribution by Directors
- TDS under section and rate of TDS
- BUYING PROPERTY COULD NOT FILE 26QB
- Gst input for FY 23-24
- Regarding Waiver of Interest levied u/s 50 of PGST/CGST Act
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- GST Regis.
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
Trending Online Classes
CAclubindia
