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 .
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
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