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Provision March 2021

Prathyusha Varma (ArticleShip) (393 Points)

12 April 2021

Dear Experts,

I have made provision in March 2021 books for all our vendors.

Question here is "can vendor submit the invoice with March 2021 Date or April 2021 Date"

Does date effect anything for which provision is made ?

Thanks in Advance

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15 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 12 April 2021

Yes date effects for which provision made.

It should be for April

Prathyusha Varma (ArticleShip) (393 Points)
Replied 12 April 2021

How does it effect can you please explain with an example?

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 12 April 2021

If date mentioned in wrong then provision shall be not correctly posted as amount can be related to other period.
Say February bill if dated April then provision should get effected, February bill shall be provisioned for March

CMA Poornima Madhava (CMA) (13097 Points)
Replied 13 April 2021

Originally posted by : Prathyusha Varma
	Dear Experts,I have made provision in March 2021 books for all our vendors. Question here is "can vendor submit the invoice with March 2021 Date or April 2021 Date"Does date effect anything for which provision is made ?Thanks in Advance

1) In case of goods, it is better to account purchase in March itself rather than provisional entries to avoid duplication of work. Usually vendors provide invoice (in respect of supplies made during March) in the month of March itself, in which case no separate provision is required.

2) In case you make provision in March and accept bills for April, then GST ITC will get deferred to subsequent month.

3) Tax to be deducted at source even on provisional entries.

CMA Poornima Madhava (CMA) (13097 Points)
Replied 13 April 2021

Originally posted by : Prathyusha Varma
	Dear Experts,I have made provision in March 2021 books for all our vendors. Question here is "can vendor submit the invoice with March 2021 Date or April 2021 Date"Does date effect anything for which provision is made ?Thanks in Advance

2) In case you make provision in March and accept bills for April, then GST ITC will get deferred to subsequent month.

3) Tax to be deducted at source even on provisional entries.

Prathyusha Varma (ArticleShip) (393 Points)
Replied 13 April 2021

Dear Poornima Ji,

Thanks for your prompt reply. It is not purchase of goods but professional service.

I created provison based on agreement on 31st March 2021 and we closed our books on 7th April 2021 and received invoice with 31st March 2021 date .

Can they give invoice with March date ? or should I ask for April dated ?

ignore tds or gst effect...just needed accounting perpective

CMA Poornima Madhava (CMA) (13097 Points)
Replied 13 April 2021

March/April anything is fine. First the provision was made and then the invoice was received. Accept the one that is easy for you to account.

Prathyusha Varma (ArticleShip) (393 Points)
Replied 13 April 2021

Thank you !

Manjula (Accountant ) (119 Points)
Replied 21 April 2021

I have received the bill dated 05/04/2021 for freight charges which is pertaining to 2020-21.Now I want pass provision entry for the freight charges for 2020-21 with tds effect.
is the below entry is correct?

Dr.Freight charges -Rs.100/-
Cr.TDS- Rs.2/-
Cr.Expense Payable (not party)-Rs.98/-

or

Dr.Freight charges -Rs.100/-
Cr.TDS- Rs.2/-
Cr.ExpensePayable (not party)-Rs.100/-
Dr.Party A/c -Rs. 2/-

please clarify which is correct entry with reason for the correct entry.

Prathyusha Varma (ArticleShip) (393 Points)
Replied 22 April 2021

Go with option1 but how can you pass provision entry in last books ? has last year books still not closed yet ?

Manjula (Accountant ) (119 Points)
Replied 22 April 2021

Not closed, upto 30th will not close our books.why the second entry is not correct.

Prathyusha Varma (ArticleShip) (393 Points)
Replied 22 April 2021

Because invoice date in FY 21-22

Manjula (Accountant ) (119 Points)
Replied 22 April 2021

Actually only the tds amount is debiting to the party except that there is no effect to party. we know the party details and we need the party details while filing the returns.