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Money held as security deposit by govt department

jp dafria (partner) (23 Points)

28 July 2021

Q1. May it be said that it is hold for deficiency in services in future?
Q2. GST could be paid on SD on its actual receipt ?

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3 Replies

CA Raj Doshi (Practising CA) (8723 Points)
Replied 28 July 2021

A1 - Depends on the contract/ tender terms and conditions.

A2 - Retention of money is secondary and is only post the sales in done. So GST is already raised on the entire consideration ( including deposit ) so no GST later on at the time of receipt.

Harsh Khemchandani (116 Points)
Replied 29 July 2021

No gst payable on SD

CMA Poornima Madhava (CMA) (13097 Points)
Replied 29 July 2021

Since security deposit is demanded before execution of contract, it would not be possible to conclude in advance that there would be a deficiency of service. So no GST can be paid on advance receipts on this basis.

Further, no gst on refundable deposits.