Unbilled Revenue
This query is : Resolved
23 August 2020
My Client provides payroll processing services where he processes payroll and raises bills as follows...
Jan 20 payroll processed in Feb 20, So bill is raised in Feb 20 and GST is paid in March 20. However, even though March Month payroll bills are to be raised in April 20, As per Income Tax provisions, Income of March Month bills are booked in March 20 itself.
Now the question is, March Month Payroll bills which normally would have been booked in April but due to Income Tax Provisions booked in March itself, GST is payable in which month? Is it possible to treat such bills as Unbilled Revenue in Income Tax and GST is paid in Normal way. i.e. March Bills to be raised in April and GST paid in May 20 Or GST is payable in April itself treating these bills as March Bills merely because they are treated as revenue under income tax Act even if actual billing has not taken placed in March 20
Jan 20 payroll processed in Feb 20, So bill is raised in Feb 20 and GST is paid in March 20. However, even though March Month payroll bills are to be raised in April 20, As per Income Tax provisions, Income of March Month bills are booked in March 20 itself.
Now the question is, March Month Payroll bills which normally would have been booked in April but due to Income Tax Provisions booked in March itself, GST is payable in which month? Is it possible to treat such bills as Unbilled Revenue in Income Tax and GST is paid in Normal way. i.e. March Bills to be raised in April and GST paid in May 20 Or GST is payable in April itself treating these bills as March Bills merely because they are treated as revenue under income tax Act even if actual billing has not taken placed in March 20
24 August 2020
GST is payable as per invoice date.So if you raise bill in April of services provided in March, then the GST to be reported in your April month GSTR1 and GSTR3B.
25 August 2020
But Sir this case, In Books of Accounts, If income is booked on accrual basis without issuing invoices to comply with income tax provisions then what will happen???
Because in this case, Revenue will be recognized in March itself in in books of account, even if Bills are not issued to comply with Income Tax Act...
In this case, will I need to pay GST in April as revenue is booked in March or at the time of issuance of actual invoice...
Can interest be levied here for the period from recognition of revenue in the Books of Account and actual issuance of Invoice?
When does the concept of "Unbilled revenue" apply in GST
Because in this case, Revenue will be recognized in March itself in in books of account, even if Bills are not issued to comply with Income Tax Act...
In this case, will I need to pay GST in April as revenue is booked in March or at the time of issuance of actual invoice...
Can interest be levied here for the period from recognition of revenue in the Books of Account and actual issuance of Invoice?
When does the concept of "Unbilled revenue" apply in GST
02 August 2025
Great question! The interplay between **Income Tax accounting (accrual basis)** and **GST invoicing/tax liability** can often be tricky, especially in cases like unbilled revenue.
---
### Key points to understand here:
1. **Income Recognition under Income Tax Act (Accrual Concept):**
* For income tax purposes, income is recognized on an accrual basis. So even if invoice is not issued, if services are rendered, the income is booked in the books of account in that period (e.g., March).
2. **GST Liability & Invoice Date:**
* GST liability **arises at the time of issuance of invoice** or **payment received**, whichever is earlier, as per GST law.
* The **time of supply** (Section 12 of CGST Act) governs when GST is payable.
* Invoice issuance is the key trigger for GST liability, not when income is booked in the books of accounts.
3. **What about Unbilled Revenue?**
* Unbilled revenue (income accrued but invoice not raised) is a concept used in accounting.
* Under GST, **liability arises only when invoice is issued or payment is received**.
* So, even if revenue is booked in March for accounting and income tax, if invoice is issued only in April, GST is payable in April (or earlier if payment is received before April).
4. **Interest on Late GST Payment?**
* If GST is paid late (i.e., after the time of supply), interest may be levied.
* However, if you are issuing the invoice in April for March services, and paying GST accordingly, no interest is payable because the invoice date defines the time of supply.
* So no mismatch between income tax and GST timing triggers interest, provided GST is paid as per invoice date.
---
### So, for your client’s scenario:
| Situation | GST Payable Month | Notes |
| -------------------------------------------- | -------------------- | ----------------------------------------- |
| Income booked in March (accounting) | Not relevant for GST | GST is independent of income booking date |
| Invoice issued in April (for March services) | April | GST payable in month of invoice issuance |
| GST paid in March without invoice | Not compliant | May attract interest and penalty |
---
### Summary:
* **GST liability depends on invoice/payment date, not accounting income recognition date.**
* You **cannot treat unbilled revenue as GST liability in earlier month** just because income is booked for income tax.
* The concept of unbilled revenue is for accounting and income tax purposes only, **not for GST payment timing**.
* Interest or penalty under GST may arise only if GST is not paid as per invoice date.
---
If you want, I can help draft a note or policy explanation for your client on how to handle this timing difference between Income Tax and GST, or how to maintain books and GST records properly to avoid confusion. Would you like that?
---
### Key points to understand here:
1. **Income Recognition under Income Tax Act (Accrual Concept):**
* For income tax purposes, income is recognized on an accrual basis. So even if invoice is not issued, if services are rendered, the income is booked in the books of account in that period (e.g., March).
2. **GST Liability & Invoice Date:**
* GST liability **arises at the time of issuance of invoice** or **payment received**, whichever is earlier, as per GST law.
* The **time of supply** (Section 12 of CGST Act) governs when GST is payable.
* Invoice issuance is the key trigger for GST liability, not when income is booked in the books of accounts.
3. **What about Unbilled Revenue?**
* Unbilled revenue (income accrued but invoice not raised) is a concept used in accounting.
* Under GST, **liability arises only when invoice is issued or payment is received**.
* So, even if revenue is booked in March for accounting and income tax, if invoice is issued only in April, GST is payable in April (or earlier if payment is received before April).
4. **Interest on Late GST Payment?**
* If GST is paid late (i.e., after the time of supply), interest may be levied.
* However, if you are issuing the invoice in April for March services, and paying GST accordingly, no interest is payable because the invoice date defines the time of supply.
* So no mismatch between income tax and GST timing triggers interest, provided GST is paid as per invoice date.
---
### So, for your client’s scenario:
| Situation | GST Payable Month | Notes |
| -------------------------------------------- | -------------------- | ----------------------------------------- |
| Income booked in March (accounting) | Not relevant for GST | GST is independent of income booking date |
| Invoice issued in April (for March services) | April | GST payable in month of invoice issuance |
| GST paid in March without invoice | Not compliant | May attract interest and penalty |
---
### Summary:
* **GST liability depends on invoice/payment date, not accounting income recognition date.**
* You **cannot treat unbilled revenue as GST liability in earlier month** just because income is booked for income tax.
* The concept of unbilled revenue is for accounting and income tax purposes only, **not for GST payment timing**.
* Interest or penalty under GST may arise only if GST is not paid as per invoice date.
---
If you want, I can help draft a note or policy explanation for your client on how to handle this timing difference between Income Tax and GST, or how to maintain books and GST records properly to avoid confusion. Would you like that?
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