Gst applicability on accrued income treated in balance sheet

This query is : Resolved

Palash Ghosh (Querist)
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10 November 2018 Dear Experts,

We have considered commission to be received from supplier on achieving target in the balance sheet for the FY 2017-18. But due to unavailability of Credit Note from supplier, we were unable to take GST effect for that.

Respective Credit note received from supplier in June-July 2018.

What will be consequences of that in GST?

Will we have to pay GST for that income we considered in balance sheet?

Kindly provide your valuable response with supporting rule or case law.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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11 November 2018 GST not applicable on accrued income. GST payable adjustable based on tax invoice/debit note/credit note issued.

To check the point of time of supply and liability to pay tax under Goods and Service Tax on the above income we need to understand the provisions prescribed under Section 13 of CGST Act. The relevant extracts have been enumerated below: –

The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of this section.

(2) The time of supply of services shall be the earliest of the following dates, namely :—

(a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or

(b) the date of provision of service, if the invoice is not issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or

(c) the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not apply :

Provided that where the supplier of taxable service receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice relating to such excess amount.

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