Retention amount

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1 Points Joined May 2020
Dear
we have paid full GST amount and kept 5% of basic value on hold as retention amount for 1 year for performance of material, should we reverse any amount pertaining to 5% basic.
please share your comments.
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On 27 October 2024 at 19:48 Report
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Master in Accounts & high court Advocate
9596 Points Joined December 2011

In your case, where you've paid the full GST amount and withheld 5% of the basic value as a retention amount for 1 year for performance of material, you'll need to reverse the GST portion related to the retention amount. Since you've already paid the full GST amount, you'll need to calculate the GST portion related to the 5% retention amount and reverse it.

Here's a simplified example: - 

Basic value: ₹100 - Retention amount (5%): ₹5 - GST rate: 18% - GST amount: ₹18 (calculated on ₹100) - GST portion related to retention amount: ₹0.90 (calculated as ₹5 x 18%) You'll need to reverse ₹0.90 as the GST portion related to the retention amount. 

Please note that this is a simplified example, and you may need to consider other factors like the GST rate, taxability, and compliance requirements specific to your situation. 

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On 27 October 2024 at 20:50


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