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Prepaid Expenses in IT on which GST already paid

536 views 1 replies

Manoj Punjabi

Accountant

381 Points Posted on 27 June 2025

Dear Experts.

Please guide me on this query:

Advance paid for AMC for 2 years, bill received in FY24-25 with GST on full amount.

GST ITC claimed in same year FY 24-25.

1) Now shall we show advance paid part as prepaid expense.

2) If we show it as prepaid, it will appear as expense in next year FY25-26 without GST payment, as GST on whole amount paid in current year FY24-25.

How to proceed.

Please guide.

Replies (1)

Rama chary Rachakonda

Master in Accounts & high court Advocate

9615 Points Posted on 30 June 2025

Yes. the advance paid part should be shown as a prepaid expenses. This is because the service (annual maintenance contract or AMC) has not been fully consumed in the current financial year (FY24-25). Only a portio of the AMC service will be utilised in FY24-25, AND THE REMAINING PORTION WILL BE UTILIZED IN FY 25-26. Therefore, it is appropriate to record the advance paid as a prepaid expenses to match the expense with the period in which the service is actually consumed.