Turnover in case of Construction Business

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This discussion clarifies the difference in calculating turnover for construction businesses between GST and Income Tax. While GST typically uses an agreement basis, Income Tax often relies on the Work-In-Progress (WIP) or percentage of completion method. It's permissible for these figures to differ, provided a reconciliation statement is prepared. Compliance with the Real Estate (Regulation and Development) Act, 2016, should also be considered.

Priyanka

Priyanka (Querist)

20 December 2021 Respected Experts,
We have a client engaged in constriction of Residential building. GST is paid as and when agreement is done with buyer. In case of GST, Turnover is on agreement basis.
But how to show turnover in Income tax ? It should be same as per GST on agreement basis or on the basis of WIP ? is it allowed if turnover as per both acts differ ?
Kindly guide.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

20 December 2021 Under income tax the turnover should be based on WIP. GST turnover should be based on advance received.
Yes, it's allowed if both turnover differ, for which reconciliation statement is prepared.

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

21 December 2021 Seems for accounting as well as for IT ,% of completion method (AS-7) is appropriate. The Real Estate (Regulation and Development) Act, 2016 compliance has also to be considered.

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