Material Invoicing - Query
This query is : Resolved
01 July 2025
Dear All,
We are participating in a tender as a consortium A & B, B will claim a portion of their software price as part of material supply. A sample of the line items, the total invoice amount for each line item, and the share of A and B are listed. In the absence of any line item for Software supply for Gates, how would B invoice their share of the amount against the material supply?
We are participating in a tender as a consortium A & B, B will claim a portion of their software price as part of material supply. A sample of the line items, the total invoice amount for each line item, and the share of A and B are listed. In the absence of any line item for Software supply for Gates, how would B invoice their share of the amount against the material supply?
12 August 2025
Got it — you’re in a consortium (A & B) bidding for a tender, and B needs to claim a part of the software price that’s bundled into the material supply portion, but the invoice or line items don’t separately list software under materials like gates.
Here’s how B can approach invoicing their share properly:
Key Points to Consider:
Breakup of Invoice Amounts:
Since the original invoice lumps together materials and software, ideally the consortium should agree internally on the valuation and split of software vs. material.
Separate Invoicing for Software Share:
B can issue a separate invoice for their software portion to A or the customer, depending on the contract structure.
If B’s share is part of the consortium’s supply, the invoice should clearly describe the software component.
Modify Line Items / Supplementary Invoice:
If the original tender or contract does not specify software separately, you can issue a supplementary invoice or debit note clarifying the software value included in the material cost.
Or create a detailed breakup sheet showing how the price is split between hardware/materials and software.
GST Compliance:
Software supply attracts GST differently than physical materials.
For software, B must charge GST applicable to software (usually 18%), while materials might have different GST rates.
So correct classification and invoicing is necessary.
Documentation:
Maintain clear internal records/agreement within the consortium about how the amount is split.
This is important for audit and tax purposes.
Practical Steps:
Step 1: Prepare a breakup document showing total tender price → material value + software value.
Step 2: B issues a separate invoice for the software portion to either A or the customer (as per agreement).
Step 3: B charges GST on software supply portion as per GST laws.
Step 4: Both parties maintain copies of all documents for transparency.
Here’s how B can approach invoicing their share properly:
Key Points to Consider:
Breakup of Invoice Amounts:
Since the original invoice lumps together materials and software, ideally the consortium should agree internally on the valuation and split of software vs. material.
Separate Invoicing for Software Share:
B can issue a separate invoice for their software portion to A or the customer, depending on the contract structure.
If B’s share is part of the consortium’s supply, the invoice should clearly describe the software component.
Modify Line Items / Supplementary Invoice:
If the original tender or contract does not specify software separately, you can issue a supplementary invoice or debit note clarifying the software value included in the material cost.
Or create a detailed breakup sheet showing how the price is split between hardware/materials and software.
GST Compliance:
Software supply attracts GST differently than physical materials.
For software, B must charge GST applicable to software (usually 18%), while materials might have different GST rates.
So correct classification and invoicing is necessary.
Documentation:
Maintain clear internal records/agreement within the consortium about how the amount is split.
This is important for audit and tax purposes.
Practical Steps:
Step 1: Prepare a breakup document showing total tender price → material value + software value.
Step 2: B issues a separate invoice for the software portion to either A or the customer (as per agreement).
Step 3: B charges GST on software supply portion as per GST laws.
Step 4: Both parties maintain copies of all documents for transparency.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Tax Audit Applicability – Newly Formed Partnership Firm with Profit Below 6%/8%
- Difference between Date of Payment and Date of Deduction?
- TDS CREDIT MISMATCHING
- Buy back of shares u/s69
- GST Rate for Catering Services
- Bank details not Visible on Traces Portal
- Taxability of Partnership firm for FY 2025-26
- Cash balance limit and property purchases limit
- Can we choose not to report losses in ITR3 if they cannot be carried forward?
- Same demand raised for original as well as rectification request return
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
- LLP audit under companies act
- Experienced CA recommendation from Kolkata for FNO return filing
- Interest Reporting in Form 168
- Sales of goods of amount Rs77 lakhs to a party
- Tax Demand of ₹4,650 for AY 2026-27
- Concept of Vendor and customner reconciliation
- Mistake in e-invoice identified after 24 hours
- EXPORT PAYMENT
- NRI ITR2 account in 2025-26.
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
