How to treat work-in-progress in GST/Income Tax

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This discussion addresses how to handle partially completed work contracts for GST and Income Tax purposes when no bill has been raised yet. It covers situations where only purchase bills for raw materials are available, resulting in input tax credits for GST and a net loss for Income Tax. The advice given is to raise monthly tax invoices based on the progress of work, which is considered advisable for both tax regimes.

Mahabir Prasad Agarwal

Mahabir Prasad Agarwal (Querist)

31 December 2020 Sir, I have partially completed a work-contract till 31.03.20, but still a lot of completion is to be finished. Bill has not been raised by me yet. But I have purchase bills of raw materials. Hence, I have only purchases and input and not sale and output. For Income tax, there is only purchases e.i. net loss. And for GST, there is only input. Sir, how should I treat the above in GST and Income tax ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

31 December 2020 Raise monthly tax invoice based progess of work both for GST and income tax.

Mahabir Prasad Agarwal

Mahabir Prasad Agarwal (Querist)

02 January 2021 If a prepare sale invoice based on value of my work done without submitting the same to the state govt.deptt. for income tax & GST only and deducting the sale bills amounts from final bill, will it be advisable ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

02 January 2021 Yes, it's advisable, submit also monthly invoice to state government.

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