Accounting for non refundable grant received under National Livestock Mission Scheme.

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This discussion explores the accounting treatment for non-refundable grants received under the National Livestock Mission Scheme. While some suggest crediting it to extraordinary income or capital reserve, the consensus leans towards treating it as a government grant related to assets. This typically involves amortising it in the Profit & Loss account over the asset's useful life or recognising it as deferred income. Challenges arise when different assets have varying useful lives or when part of the subsidy is for working capital, prompting further questions on allocation and direct credit to capital accounts for sole proprietorships.

Sudipta Das

Sudipta Das (Querist)

30 August 2025 Assesse received Subsidy from central government under National Livestock Mission Scheme. It is nonrefundable in nature. Can it be credit in in full to PL as Extraodinary Nature income ? What will be the correct accounting treatment for the same ??

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

30 August 2025 Government grants that are similar to promoter contributions ought to be credited to the capital reserve.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

30 August 2025 The subsidy provided under the National Livestock Mission should generally be treated as a grant related to assets, not income.
The scheme primarily provides a "capital subsidy" for the establishment of livestock, poultry, piggery, and feed/fodder units, which means the funds are meant to help finance the purchase or creation of long-term assets like breeding farms, machinery, and infrastructure.
According to accounting standards, such capital subsidies are best classified as government grants related to specific assets, to be amortized in the Profit & Loss (P&L) account over the useful life of the relevant asset.
The subsidy reduces the cost of the asset or is treated as deferred income, recognized in the P&L over the depreciation period of the asset.

Sudipta Das

Sudipta Das (Querist)

30 August 2025 But in this case different assets have different useful life. Also a part of subsidy is for working capital. So how to determine how much amount to be credited to PL as deffered income. ??

Sudipta Das

Sudipta Das (Querist)

01 September 2025 If the grant is received by a sole prorietorship organisation can it be directly transffer to capital account.

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