Construction contract for epc project

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This query is : Resolved

DALPAT R GOYAL (Querist)

10 June 2019 Dear All,

I am facing an accounting problem for Revenue recognition for below EPC Case
Client is a contractor and has awarded a EPC contract by Govt for Rs.100 .
The client is required to Supply goods and services both , the portion of supply of goods is of Rs.60 and Services (erection services ) is of Rs.40. The client has subcontract to the same work to another contractor for Rs.100, which includes supply of goods for Rs.70 and Service for Rs.30.
Further the client has payment term with Govt is 90% payment of Supply of Goods will be made on completion of supply and balance 10% after completion of services part.

My Questions are as below

1. What will be the accounting treatment in the books of Client and subcontractor for supply of goods ?
2. What will be the accounting treatment in the books of Client and subcontractor for supply of services ?
3. which accounting standard or IndAs will be applicable for Revenue recognition ?
4. What are the Tax provisions under Income Tax Law and GST law will apply for Tax purposes. ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

11 June 2019 1 Recognize revenue when supply made and accepted.
2 Recognize revenue based on measurement taken periodically.
3 IND AS 115 applicable.
4 For income tax Income Computation & Disclosure Standards applicable. GST will consider this work under services.

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